Lombard Odier Investment Management has launched an emerging market local government bond ETF in partnership with ETF Securities.
The product, which is the fourth of a range of fixed income ETFs developed through the partnership, provides exposure to local currency debt of emerging markets as well as developing countries.
The investment strategy of the ETF will be fundamentally weighted and will identify those countries that are “best-placed to repay their debt”.
The fund has a total expense ratio of 0.55 per cent per year.
Lombard Odier, which manages $5bn in smart-beta fixed income funds and mandates, entered the ETF market in March 2015 with the launch of a range of fundamentally weighted fixed income ETFs.
The first three products of this range include the Euro Corporate Bond Fundamental, the Global Corporate and Government Bond Fundamental funds.
Lombard Odier IM head of fundamental fixed income Kevin Corrigan says: “As interest rates in advanced economies remain depressed, relative valuation dynamics in emerging market debt are becoming interesting and our fundamentally-weighted approach provides greater quality-focused diversification for investors.”
The new ETF also offers access to India and China, which are normally excluded from traditional benchmarks, Lombard Odier IM says.
Howie Li, executive director and co-head of Canvas at ETF Securities, says: ”Emerging sovereign bonds provide an appealing yield-to-maturity in the current environment as interest rates in advanced economies are likely to remain low for longer.”