New York-based asset manager Van Eck Global has launched Market Vectors Emerging Markets Local Currency Bond ETF (NYSE Arca: EMLC), the first U.S.-listed exchange-traded fund (ETF) designed to provide investors with exposure to an index that tracks a basket of bonds issued in local currencies by emerging market governments. The Fund has a gross expense ratio of 0.60 percent and net expense ratio of 0.49 percent.
EMLC seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of J.P. Morgan Government Bond Index-Emerging Markets Global Core Index (ticker: GBIEMCOR). J. P. Morgan is a major provider of innovative emerging market indexes, with approximately $80 billion benchmarked to its GBI-EM index family as of June 23, 2010. GBIEMCOR currently has 171 constituents with maturities ranging from one to 30 years, and an average yield-to-maturity of 6.8 percent as of July 1, 2010.
The Index currently tracks a selection of bonds issued in local currencies by thirteen emerging market countries representing Latin America, Eastern Europe, Africa, and Asia: Brazil, Colombia, Egypt, Hungary, Indonesia, Malaysia, Mexico, Peru, Poland, Russia, South Africa, Thailand, Turkey. GBIEMCOR is market-cap weighted, with individual country exposures capped at 10 percent to provide more diversification among countries within the index. As of July 1, 2010 six countries met the 10 percent threshold, including Brazil, Malaysia, Mexico, Poland, South Africa and Thailand. Index rebalancing occurs monthly.
“With EMLC, we’ve created an ETF that allows investors to participate in the dynamics of the local emerging market economies, which include potential for currency appreciation and higher yields, relative to their developed market counterparts,” said Jan van Eck, Principal at Van Eck Global. “We’re very excited to be able to provide a means for tracking an index from the popular J.P. Morgan local currency bond index family, particularly at a time when the global markets are witnessing the growing importance of new economic leaders in regions such as Asia and Latin America.”