Investors now have a choice in the area of emerging market debt exchange-traded funds (ETFs).

Earlier this week, Barclays Global Investors added the iShares JPMorgan USD Emerging Markets Bond Index Fund (NYSE Arca: EMB) to its lineup; the new fund tracks the JPMorgan EMBI Global Core Index covering sovereign and quasi-sovereign emerging market debt issued in U.S. dollars.

Previously, PowerShares was the only firm offering an ETF for that particular asset class with its PowerShares Emerging Markets Sovereign Debt Portfolio (AMEX: PCY), tracking the DB Emerging Market USD Liquid Balanced Index. PCY was launched in October, and currently has about $35 million in assets. (Read the article about the lauch of PCY in October here.)

EMB's most heavily weighted country is Brazil, with an 11.65% weighting; the country with the smallest weighting is Colombia at 3.40%. In all, EMB covers 10 companies with 35 holdings.   PCY, on the other hand, covers more markets (about 17), but has just 25 holdings. EMB's underlying index has a slightly better average credit rating of BB+/Ba1, versus PCY's underlying index's credit rating of BB/Ba2.

EMB, however, is more expensive than PCY. The iShares fund charges 60 basis points versus the PowerShares fund's 50-basis-point expense ratio.  And as of the third quarter, on an annualized basis, PCY's underlying index outperformed that of EMB for the one-year, three-year and five-year periods.

With investors paying more attention to emerging markets because of the diversification benefits, emerging market debt could end up in the spotlight soon. Should that be the case, both BGI and PowerShares will be positioned nicely to benefit, although with its lower costs and better performance, PCY appears to have an edge over EMB at first glance.

View the prospectus for EMB here.

View the prospectus for PCY here.