Van Eck Global, the New York-based fund manager behind the
Market Vectors ETFs, filed paperwork with U.S. regulators to market
two more emerging market bond funds that would go head-to-head with
some sizable competition from providers such as WisdomTree and
iShares.
The Market Vectors Emerging Markets Aggregate Bond ETF and its
dollar-denominated counterpart, the Market Vectors Emerging Markets
USD Aggregate Bond ETF, would each own developing economies'
sovereign and nongovernment debt, both investment-grade and junk,
with the latter being a dollar-denominated portfolio.
Neither filing detailed what indexes will underlie the funds,
nor their costs or tickers. In fact, the filings provided little
detail other than to say that the strategies would replicate their
benchmarks through representative sampling.
The funds would join Van Eck's other two emerging market debt
funds, one focused on government-issued local currency debt-the
$760 million Market Vectors Emerging Markets Local Currency Bond
ETF (NYSEArca:EMLC)-and the other focused on Latin American
debt-the Market Vectors LatAm Aggregate Bond ETF (NYSEArca:BONO),
which has under $10 million in assets gathered in just over a
year.
Emerging markets debt funds have grown in popularity for their
attractive yields relative to developed market bonds at a time when
investors are searching for income opportunities in a near-zero
interest rate environment. But their performances vary
significantly, as does their exposure to currency risk, as
IndexUniverse's analyst Paul Britt recently pointed out in a
blog.
Perhaps one of the most successful funds in the local currency
debt space is the WisdomTree Emerging Markets Local Debt Fund
(NYSEArca:ELD), which has gathered more than $1.2 billion in two
years. ELD has an average yield to maturity of 4.6 percent,
according to information on the company's website.
iShares' JPMorgan USD Emerging Markets Bond Fund (NYSEArca:EMB)
is another big act to follow, with more than $5.4 billion tied to
its dollar-denominated debt portfolio launched back in 2007. EMB's
average yield to maturity is currently pegged at 4.2 percent.
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