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Market Vectors Planning Two International Bond ETFsEric Dutram • Oct. 7, 2010
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EMLC vs. ETF Alternatives
The Emerging Markets Local Currency Bond ETF (EMLC) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the J.P. Morgan GBI-EMG Core Index (GBIEMCOR). The underlying Index provides direct exposure to local currency bonds issued by emerging market governments. As such, the Fund is subject to the risks of investing in emerging market debt securities.
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- In Your Portfolio: A Guide to International and Emerging Market Government Bond ETFs
- Asset Class Performance: Bonds, Emerging Markets
Wednesday, Feb 124:50 PM
Wednesday, Feb 124:50 PM| 3 Comments
- "The default rate is non-existent," he says, agreeing that fundamentals in high-yield look good. "Instead of a default cycle, we've had a refinance cycle." The issue, however, is valuation. At the end of 2013, the 30-year Treasury yielded about 4%, while BB corporates "unbelievably" yielded just 4.5% - a "remarkably low incremental yield."
- His feelings about overvaluation extend to the investment grade corporate market (LQD) as well.
- Most curious to Gundlach is how universally the long bond is hated at 4%, while junk yielding 4.5% gets so much love.
- Besides Treasurys, Gundlach sees value in emerging market bonds. The risk is in the currency, but this can be eliminated by buying dollar-denominated paper.
- High yield ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, HYHG, BSJG, BSJI, ANGL, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND
- Investment grade ETFs: LQD, VCSH, VCIT, CORP, VCLT, CSJ, CIU, CFT, SCPB, LWC, CLY, ITR, QLTA, IGHG, PFIG, SLQD, IGS, CBND, IGU, QLTB
- EM bond ETFs: EMB, PCY, ELD, EMLC, EMCB, VWOB, EMCD, ILB, HYEM, EMHY, LEMB, ITIP, EMAG, EBND, GTIP, PFEM, EMSH, SEMF, IEMF, LEMF
Tuesday, Jan 712:12 PM
Tuesday, Jan 712:12 PM| Comment!
- The EGShares TCW EM Short Term Investment Grade Bond ETF (SEMF), Intermediate Term Investment Grade Bond ETF (IEMF), and Long Term Investment Grade Bond ETF (LEMF) will begin trading on January 8th; offering exposure to both sovereign and corporate bonds.
- Each new fund will charge 0.65%, which is above the average expense ratio for this sector, but few funds currently offer specific duration exposure to emerging market bonds.
- Other emerging market bond ETFs: EMB, PCY, ELD, EMLC, EMCB, VWOB, ILB, EMCD, LEMB, ITIP, EBND, EMAG, GTIP, PFEM, EMSH
Thursday, Nov 212013, 9:12 AM
Thursday, Nov 212013, 9:12 AM| Comment!
- Emerging market bond ETF investors worried about duration risk will have their first short-duration fund to choose from starting today with the launch of ProShares' Short-Term USD Emerging Markets Bond ETF (EMSH). The fund has an expense ratio of 0.5%.
- The underlying index only selects paper with a fixed rate and maturity of 0-5 years, with a weighted average yield-to-maturity of three years or less. Sovereign, and corporate - both investment and speculative grade - will be included.
- As comparison, the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a 7-year effective duration.
- Corporate EM bond ETFs: EMCB, EMCD, HYEM, EMHY
- Government EM bond ETFs: EMB, PCY, ELD, EMLC, ILB, LEMB, ITIP, EBND, GTIP, PFEM
Wednesday, Nov 132013, 11:33 AM
Wednesday, Nov 132013, 11:33 AM| Comment!
- Market Vectors files paperwork for the Emerging Markets Aggregate Bond ETF EMAG, with an after-fee-waiver annual expense ratio of 0.49%.
- The fund will hold both sovereign and corporate, and both investment grade and high-yield paper from a large number of emerging market countries. At the end of Q3, the tracked index held about 1,800 bonds from a total of 694 issuers.
- Market Vectors' Emerging Markets Local Currency Bond ETF (EMLC) has just over $1B in AUM.
- Related ETFs: EMB, PCY, ELD, EMLC, ILB, LEMB, ITIP, EBND, GTIP, PFEM, EMCB, EMCD, HYEM, EMHY
Saturday, Sep 282013, 1:30 PM
Saturday, Sep 282013, 1:30 PM| Comment!
- "Sovereign emerging-market yields today are consistent with their averages between 2003 and 2007, but U.S. Treasury rates are only about half as high," writes Shuli Ren, in a bullish piece on emerging-market debt.
- The premise is simple: 17 consecutive weeks of EM bond fund outflows has "flooded out irrational exuberance that had piled up over the winter and spring" and brought the market back down to earth, even as institutional demand has remained strong, suggesting retail investors have overreacted to taper talk.
- With the Fed still striking a highly accommodative tone, emerging-market debt could rally as investors discover the relatively attractive valuations.
- ETFs - EMB, LEMB, PCY, EMLC, ELD, PFEM, EBND, VWOB; Asia: ALD; Latin America: BONO
Thursday, Aug 152013, 11:12 AM
Thursday, Aug 152013, 11:12 AM| 13 Comments
- Anything paying income is again being particularly hard hit by the rise in Treasury yields (the 10-year now at a 2-year high of 2.8%).
- Selections in mREITs (REM -2.1%), (MORT -1.9%) include RAIT Financial Trust (RAS -4.1%) - whose IRT had an ill-timed IPO yesterday and Ellington Residential (EARN -4.8%) - the market not caring about reasonable Q2 performance, a hefty discount to book, and the launch of a repurchase program. Other mREITs: CYS Investments (CYS -3.6%), Apollo (AMTG -3%), Newcastle (NCT -5%), Invesco (IVR -2.7%), Arlington Asset (AI -1.2%). A leveraged ETF play: MORL.
- Hanging in there relatively well are the BDCs: Fifth Street (FSC -1.3%), Triangle (TCAP -1%), MCG (MCGC -1.2%), Hercules (HTGC -1.2%), Ares (ARCC -0.3%).
- BDC ETFs: BDCS, BDCL, BIZD.
- In emerging markets fixed income, a trader takes note of EDD, a closed-end fund now trading at more than a 15% discount to NAV.
- Emerging market bond ETFs: EMB, LEMB, PCY, EMLC, ELD, PFEM, EBND, VWOB.
Saturday, Jun 152013, 11:36 PMUBS thinks it may be 1994 all over again. Some similarities: The Fed's actions to reflate the economy post-2008 resemble the easy money policies that were put in place post-S&L crisis; current "lackluster" economic growth mirrors "mini-cycles"of '90-'93; 290 bps plunge in Treasury yields from '07-'12 reminiscent of 400 bps decline from '90-'94; downtrend in CPI over the past five years resembles drop from early '90s to '94. UBS' advice: Avoid "popular convergence trades" such as EM credit (EMB, EMLC), EU periphery sovereign debt (ITLT, ITLY), U.S. MBS (MBB,VMBS), and high yield (HYG, JNK). |Saturday, Jun 152013, 11:36 PM| 2 Comments
Thursday, May 92013, 11:14 AMPowerShares adds another to the emerging market debt ETF space, prepping the launch of the Fundamental Emerging Markets Local Debt Portfolio (PFEM), with annual cost of 0.50%. The fund will join a space anchored by PowerShares' own PCY, WisdomTree's ELD, and iShares' EMB. Others: LEMB, EMLC. |Thursday, May 92013, 11:14 AM| Comment!
Wednesday, Feb 272013, 5:08 AMArgentina is due to appear in a New York Appeals Court today, when it will try to persuade the judge to reverse a ruling that it pay $1.3B to investors that refused to accept the country's debt restructuring after it defaulted 2001. The case could "create unrest in the credit markets and result in cascades of litigation," says Bank of New York Mellon (BK). |Wednesday, Feb 272013, 5:08 AM| 3 Comments
Wednesday, Feb 62013, 5:04 PMVanguard plans the launch of an international aggregate bond ETF - the Vanguard Total International Bond Index Fund - by the end of Q2. More enticing, the fund will have a 0.20% expense ratio - less than the originally slated 0.30% - and a planned 0.25% purchase fee has been eliminated. |Wednesday, Feb 62013, 5:04 PM| Comment!
Thursday, Nov 292012, 11:24 AMThe hunt for yield moves to Mongolia, where the oft-rescued country pulls off a sale of $1.5B in 5 and 10-year notes at rates in the 4%-5% area. At nearly 20% of Mongolia's GDP, $1.5B is the equivalent of the U.S. borrowing $2.5T. A hot spot a couple of years ago, sliding commodity prices have hit the country hard, and the government finds itself borrowing from the central bank (called QE in the U.S.) to pay its bills. |Thursday, Nov 292012, 11:24 AM| Comment!
Thursday, Nov 12012, 3:34 PMYield-starved investors are moving assets into emerging-market corporate debt ETFs, and the industry responds by upping the number of products offered to 10 from just 3 at the end of 2011. There's still plenty of room for growth - in total, such ETFs (a selection here) have about $1B AUM with the size of the EM corporate debt market at $776B. The largest U.S. corporate debt ETF, LQD alone has about $25B AUM. |Thursday, Nov 12012, 3:34 PM| Comment!
Monday, Aug 132012, 12:15 PMEmerging debt remains remains frothy despite growing economic headwinds, writes Mike Riddell, noting an issue of long-term Peruvian debt last week hit a yield spread to Treasurys of just 109 bps. Given the bid-ask on this illiquid paper is 100 bps, it is pricing in almost no credit risk. It's pre-2008 territory. "Bubbletastic." |Monday, Aug 132012, 12:15 PM| 1 Comment
Wednesday, Jul 252012, 1:05 PMStable or shrinking yield premiums to Treasurys suggest some emerging market sovereign debt is emerging as a safe-haven play. Of note are Mexico, Brazil, and Colombia, but the Philippines and Indonesia are also on the list of those not necessarily selling off every time markets go into "risk off" mode. |Wednesday, Jul 252012, 1:05 PM| Comment!
Thursday, Apr 52012, 12:32 PMA new offering of ETFs offers high yield investors greater international - both developed and emerging - exposure. EMHY is designed to track the Morningstar Emerging High Yield Bond Index, the HYXU sticks to developed countries, and the GHYG adds international (developed) exposure to the popular HYG. (PR) |Thursday, Apr 52012, 12:32 PM| 1 Comment
Tuesday, Mar 272012, 8:07 AMIn a "mildly reflating" world where deleveraging continues, Bill Gross suggests shorter-duration inflation protected bonds, dividend vs. growth stocks (also developing world vs. developed), and supply constrained commodities. Most of all, beware of levered strategies promising "double-digit returns that are difficult in a delevering world." |Tuesday, Mar 272012, 8:07 AM| 2 Comments
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