Short sellers are betting the emerging-market equity rally fueled by speculation that the Federal Reserve will keep U.S. interest rates lower for longer won’t last. Bearish bets on the Vanguard FTSE Emerging Markets ETF, the biggest exchange-traded fund investing in developing-nation stocks, have increased to 2.4 percent of outstanding shares, the highest level since July 2014, from 0.4 percent in late April, according to data compiled by Markit Ltd. and Bloomberg. Shares in the $35 billion fund have rebounded 7.5 percent from an 11-week low on May 19.

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