ETF provider VanEck Investments has launched the VanEck Vectors J.P. Morgan EM Local Currency Bond Ucits ETF (EMLC) for European investors.
The ETF has been listed on the London Stock Exchange. It tracks the J.P. Morgan GBI-EMG Core Index which provides exposure to bonds issued in local currencies by emerging markets governments.
The J.P. Morgan GBI-EMG Core Index consists of a selection of bonds issued in local currencies by 16 emerging markets governments: Argentina, Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, Mexico, Peru, Philippines, Poland, Romania, Russia, Thailand, Turkey, and South Africa.
The index is market-cap weighted, with individual country exposure that does not exceed 10% in order to provide more country diversification. It is rebalanced monthly.
The ETF has a total expense ratio of 0.47%. Listings on further European Stock Exchanges will follow in the short term.
Uwe Eberle, head of International Business Development and Distribution at VanEck said: “EMLC allows investors to participate in local emerging markets economies which historically have had higher yields than developed markets and potential for currency appreciation.
“Additionally, local currency emerging markets bonds tend to have a lower correlation to the U.S. dollar and thus provide a great way to diversify a portfolio.”
He added: “After introducing our UCITS ETFs in 2015 with two gold mining equity ETFs and MOAT, a strategic beta ETF, we are pleased to add EMLC to our line-up in Europe.
“Investor interest in emerging markets has been on the rise as we see the potential for higher economic growth than in developed markets and substantial EM local real rates. EMLC reflects our commitment to offering forward-looking investment solutions that strengthen a long-term portfolio.”