VanEck launches emerging market local currency bond ETF


VanEck has launched a local currency bond ETF on the London Stock Exchange, its fourth Ucits ETF.

The VanEck Vectors JP Morgan EM Local Currency Bond Ucits ETF will have a total expense ratio of 0.47 per cent.

It tracks the JP Morgan GBI-EMG Core Index and will be launched on further European stock exchanges in the near term.

Uwe Eberle, head of international business development and distribution at VanEck, says emerging market local currency historically have higher yields than developed markets and potential for currency appreciation.

“Additionally, local currency emerging markets bonds tend to have a lower correlation to the US dollar and thus provide a great way to diversify a portfolio,” Eberle adds.

The index tracks bonds issued by 16 emerging markets governments: Argentina, Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, Mexico, Peru, Philippines, Poland, Romania, Russia, Thailand, Turkey, and South Africa.

Eberle says: “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.”

VanEck already offers two gold mining equity ETFs and a smart beta ETF.