Investors Seek More Than Yield in Emerging-Markets Bond ETFs
Currency gains add to appeal of emerging-markets funds that invest in locally denominated bonds.
By Rosalyn Retkwa
On Monday Van Eck Associates of New York City proudly announced that its Market Vectors Emerging Markets Local Currency Bond ETF (EMLC), launched in July of 2010, had surpassed the $1 billion mark in assets under management.
Van Eck is not alone in hitting that mark. WisdomTree of New York City has attracted $1.39 billion in assets since launching its WisdomTree Emerging Markets Local Debt Fund (ELD) in August of 2010. Even the smallest of the emerging-markets local-currency bond funds iShares Emerging Markets Local Currency Bond Fund (LEMB), which was launched more recently in October of 2011 is reporting an inflow of $155 million in the past month for total assets under management of $364.79 million.
So why are emerging-markets local-currency bond ETFs suddenly all the rage?