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Tue, Jul. 1, 3:45 AM
- Emerging market bond sales have soared past analyst estimates for the first half of 2014, as investors flock to higher yields. $268B of bonds sold so far this year, compared to the $240B sold in the same period of 2013.
- Due to a dovish Fed, U.S. yields have fallen this year to 2.5% from end-2013 levels of 3%. As a result, increased demand for higher yield has investors trading emerging market bonds despite geo-political risks.
- ETFs: EMB, PCY, ELD, EMLC, EMCB, VWOB, EMCD, HYEM, EMHY, LEMB, EMAG, CEMB, EBND, PFEM, EMSH, SEMF, IEMF, LEMF
Wed, Feb. 12, 4:50 PM
- "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
Tue, Jan. 7, 12:12 PM
- 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
Nov. 21, 2013, 9:12 AM
- 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
Nov. 13, 2013, 11:33 AM
- 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
Oct. 4, 2013, 1:47 PM
- Market Vectors announced earlier this week that it's popular fund for Latin American bond exposure will undergo a number of changes, including a new name, ticker, and index.
- BONO will be rebranded later this year as the Market Vectors Emerging Markets Aggregate Bond ETF and trade under the ticker EMAG to reflect the new investment objective; to seek and track the price and performance of the Market Vectors EM Aggregate Bond Index.
- Ed Lopez, Marketing Director with Market Vectors in the recent press release, "we are seeking to introduce an efficient means for investors to gain access to a broad exposure of emerging markets bonds in a single ETF."
- Effected ETFs: ILF, GML, FLN, EMB, PCY
Sep. 28, 2013, 1:30 PM
- "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
Aug. 15, 2013, 11:12 AM
- 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.
Jun. 12, 2013, 9:07 AMHere's a contrarian play for June: An ETF combining junk bonds and emerging markets. The iShares EM High Yield Bond Fund (EMHY) is off 9% over the past month, eliminating all gains (not including dividends) since inception 14 months ago. Interestingly, the fund - which has garnered an impressive $248.5M AUM - has seen no outflows since the start of June. PCY - which holds EM sovereign debt - has actually performed worse than the EM junk bond fund during the downturn. | Comment!
May. 14, 2013, 11:33 AMVanguard sets an early June start for the launch of its Emerging Markets Government Bond Fund (VWOB), The fund will track the Barclays Dollar EM Government RIC Capped Index with the expense ratio to be 0.3-0.5%. The iShares Emerging Markets Dollar Bond ETF (EMB) has an expense ratio of 0.59%. PowerShares' PCY has a ratio of 0.5%. | Comment!
May. 9, 2013, 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. | Comment!
May. 3, 2013, 7:04 AMEmerging Global Advisors files (I, II) to launch 12 new funds, including 6 bond funds - its first totally in-house fixed income strategies. Included in the equity offerings is the EM Dividend High Income ETF (possible competitors include: IDV, DEM), the EM Asia Consumer ETF, and the EM Equal Weight Sector ETF. Among the fixed income offerings are Investment Grade - short, intermediate, and long term ETFs (possible competitors include: EMB, LEMB, PCY). No ticker symbols or expense ratios are yet known, and it's possible not all 12 will make it to actual launch status. | Comment!
Feb. 27, 2013, 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). | 3 Comments
Nov. 29, 2012, 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. | Comment!
Nov. 1, 2012, 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. | Comment!
Aug. 13, 2012, 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." | 1 Comment
PCY vs. ETF Alternatives
The PowerShares Emerging Markets Sovereign Debt Portfolio (Fund) is based on the DB Emerging Market USD Liquid Balanced Index (Index). The Fund will normally invest at least 90% of its total assets in securities that comprise the Index. The Index tracks the potential returns of a theoretical portfolio of liquid emerging markets U.S. dollar-denominated government bonds issued by approximately 22 emerging-market countries. The countries in the Index are selected annually pursuant to a proprietary index methodology and the membership list is rebalanced quarterly.
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