Market Vectors Emerging Markets Local Currency Bond ETF (EMLC), the first US-listed exchange-traded fund to focus on local currency emerging markets bonds,celebrated its third anniversary on 22 July.
EMLC is among the largest US listed EM bond-focused ETFs with USD1.2bn assets under management as of 25 July 2013.
“We believe EM bonds are important in building a well-diversified fixed income investment portfolio,” says Fran Rodilosso (pictured), fixed income portfolio manager at Market Vectors. “EM bonds and bond funds were among the most affected by the broad global sell-off that took place toward the end of the second quarter. We have recently seen some of these markets recover very quickly. I believe that many local currency-denominated EM bonds continue to deliver more attractive yields, even given the perceived risks, than traditional fixed income investments. Currency and credit fundamentals in many emerging markets also continue to compare very favourably versus developed markets.”
EMLC is designed to provide investors with exposure to an index that tracks a basket of bonds issued in local currencies by EM governments. The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of J.P. Morgan GBI-EMG Core Index. As of 30 June 2013, the index tracked a selection of bonds issued in 16 different local currencies, including those of Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, Mexico, Nigeria, Philippines, Poland, Peru, Romania, Russia, South Africa, Thailand and Turkey.
EMLC has a gross and net expense ratio of 0.47 per cent, which is capped contractually until 1 September 2013. The cap excludes certain expenses, such as interest.
