Lombard Odier Investment Managers and ETF Securities have today listed their emerging market local government bond ETF on the London Stock Exchange.
The product is the fourth addition to a range of fundamental, fixed income ETFs designed to provide exposure to local currency debt of emerging markets and developing countries. The products use fundamental factors that assess issuers’ creditworthiness to identify those that the firms believe are best-placed to repay their debt.
The partners believe that today, emerging sovereign bonds offer an appealing yield-to-maturity as interest rates in advanced economies are likely to remain low for longer. They write: “In addition, unlike market-cap benchmarks, which reward the most-indebted borrowers, our fundamental focused approach is designed to deliver quality-based diversification and includes exposure to India and China (the two largest emerging market countries).”
Kevin Corrigan, Head of Fundamental Fixed Income, Lombard Odier IM comments: “We are extremely pleased to introduce our emerging market local government bond ETF to the European market. As interest rates in advanced economies remain depressed, relative valuation dynamics in emerging market debt are becoming interesting and our fundamentally weighted approach provides greater quality-focused diversification for investors. Lombard Odier IM has over five years of experience in fundamentally-weighted fixed income investing and our partnership with ETF Securities enables us to offer a wide range of investors an innovative approach to investing in emerging debt markets.”
Howie Li, Co-Head of CANVAS, ETF Securities says: “The suite of ETFs that we have brought to the market with Lombard Odier IM aim to capture the increasing shift towards more cost-effective investment solutions but, at the same time, provide an improved risk-adjusted return profile. Our first three products, launched in March, were well received and investors have already expressed their interest in the launch of this innovative emerging market ETF.”
