Investors looking to trade in a growing pile of debts may today
' new international corporate bond exchange traded fund (
). Joining the
State Street Global Advisers
fund, this will be the second international corporate bond ETF
available in the U.S. market.
With yields on U.S. debt looking paltry, interest in corporate
bonds overseas has picked up. With that, another fund giving
investors access to the space has launched.
PowerShares International Corporate Bond Portfolio
will offer exposure to investment-grade corporate bonds issued in
developed markets outside of the United States. PICB will try to
reflect the performance of the S&P International Corporate Bond
Index, with at least 80% of the fund's total assets in securities
that make up the index.
Invesco PowerShares Senior Vice President Bobby Brooks points
out that despite prevailing global concerns - the crisis in Greece
and worries about the wider eurozone - there's a case to be made
for international corporate bonds. After all, they have a low
correlation to many different asset classes: 0.26 to U.S. equities,
0.42 to emerging market debt, 0.37 to emerging market equities and
0.49 to developed market equities.
Furthermore, while some areas of the world might be struggling,
there are still a number of great companies in those countries
looking to raise capital.
"You have to look at the company issuing bonds, not just the
volatility and the noise that's taking place," Brooks says.
The index holds bonds issued by investment-grade non-U.S.
issuers in the G-10 currencies, including the Australian dollar (
), New Zealand dollar (
), British Pound (
), Swiss Franc (
), Euro (
), Norwegian krone (
), Japanese yen (
), Swedish krona (
), Canadian dollar (
) and Danish krone (
). PICB will have an expense ratio of 0.50%.
As with many bond ETFs, PICB will use a "sampling" methodology,
which means that the fund won't own all the securities in the
PICB only holds the debt of companies outside the United States
and has exposure to the nine major sectors. Aside from broad
country and sector exposure, PICB also has currency
diversification, capping the exposure of any one currency at
PICB will compete with
SPDR Barclays Capital International Corporate Bond
, which launched in mid-May. [
New Fund: Corporate Bond ETFs Go International.
For more information on corporate bonds, visit our
corporate bonds category
Max Chen and Heather Hayes contributed to this article.