There is no denying that investors have embraced emerging
in a significant way this year. Soaring assets under management
for these ETFs speak to their popularity with
Another fund can be added to that list.
The Market Vectors Emerging Markets Local Currency Bond ETF
) became the newest member of the $1 billion in AUM club,
according to announcement made by Market Vectors late Monday. To
be exact, EMLC had $1.14 billion in AUM as of the close of U.S.
markets on Monday.
EMLC, which debuted in July 2010, is the second emerging
markets bond ETF that tracks debt denominated in local currencies
to cross the $1 billion in AUM threshold. The actively managed
WisdomTree Emerging Markets Local Debt ETF (NYSE:
) was the first. EMLC is a passively managed product.
EMLC's ascent up the AUM totem pole, while impressive, is not
all that surprising. Amid anemic interest rates on U.S.
Treasuries and deteriorating credit quality in the developed
world, many bond investors have been left with few options but to
at least give consideration to emerging markets debt. That
consideration has prompted stellar AUM growth for select
In just over a week, the iShares Emerging Markets Local
Currency Bond Fund (NYSE:
), a rival to EMLC, saw its AUM total soar to over $363 million
after hauling in $150 million in fresh investments. EMLC asset
growth in 2012 has been impressive in its own right. As of May 7,
the ETF had $743 million in AUM
Said another way, the ETF's AUM has jumped by over 47 percent
in just seven months. EMLC's move to $1 billion in AUM status
underscores another important point about ETFs: First mover
advantage. The fund was the first to offer U.S. investors
exposure to sovereign bonds denominated in local currencies.
Home to 212 issues with an average modified duration of 4.92
years, EMLC allocates 10 percent of its weight to each of the
following nations: Brazil, Mexico, Poland and South Africa.
Malaysia and Turkey appear next on EMLC's country roster. Nearly
61 percent of the fund's holdings are investment grade while
almost 17 percent are non-investment grade. The remainder are not
Earlier this year, Van Eck, the parent company of Market
Vectors, announced a fee reduction on EMLC. The firm lowered the
ETF's expense ratio to 0.47 percent annually from
. That move made EMLC less expensive than rival funds, including
the iShares J.P. Morgan USD Emerging Markets Bond Fund (NYSE:
EMB, which focuses on dollar-denominated issues, is the
largest emerging markets bond ETF by assets and features an
expense ratio of 0.6 percent per year.
EMLC has another feather in its cap. On a year-to-date basis,
the ETF is the best performer of the major local currency
emerging markets sovereign bond ETFs. EMLC pays a monthly
dividend and has a 30-day SEC yield of 4.88 percent. The fund is
the first Market Vectors bond ETF to reach the $1 billion in AUM
For more on emerging markets bond ETFs, click
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