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VanEck launches local currency bond ETF


VanEck Investments has launched the VanEck Vectors JP Morgan EM Local Currency Bond UCITS ETF in Europe.

The ETF tracks the JP Morgan GBI-EMG Core Index, which is designed to provide exposure to bonds issued in local currencies by emerging markets governments. The Emerging Markets Local Currency (EMLC) fund is listed on the London Stock Exchange. It has a total expense ratio of 0.47 per cent. Listings on further European Stock Exchanges will follow in the short term.

Uwe Eberle, Head of International Business Development and Distribution at VanEck says: “EMLC allows investors to participate in local emerging markets economies which historically have had higher yields than developed markets and potential for currency appreciation. Additionally, local currency emerging markets bonds tend to have a lower correlation to the U.S. dollar and thus provide a great way to diversify a portfolio.”

The JP Morgan GBI-EMG Core Index is composed of a selection of bonds issued in local currencies by 16 emerging markets governments: Argentina, Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, Mexico, Peru, Philippines, Poland, Romania, Russia, Thailand, Turkey, and South Africa. The index is market-cap weighted, with individual country exposure capped at 10 per cent to provide more country diversification. The index is rebalanced monthly. EMLC is the fourth UCITS ETF offered under the VanEck Vectors brand.

Eberle says: “After introducing our UCITS ETFs in 2015 with two gold mining equity ETFs and MOAT, a strategic beta ETF, we are pleased to add EMLC to our line-up in Europe. Investor interest in emerging markets has been on the rise as we see the potential for higher economic growth than in developed markets and substantial EM local real rates. EMLC reflects our commitment to offering forward-looking investment solutions that strengthen a long-term portfolio.”

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