SSGA Registers Local Currency Emerging Markets Bond ETF
M*_Jeffrey 
04-25-2008, 9:00 AM | Post #2511446 |  0 Replies

On Thursday, SSGA registered SPDR Lehman Emerging Markets Local Sovereign Debt, an ETF that will invest in the local currency denominated bonds issued by governments in 18 eligible developing countries. Should the fund launch, it would be the first of its kind, as the other two emerging markets bonds ETFs--iShares JP Morgan USD Emerging Markets Bond and PowerShares Emerging Markets Sovereign Debt--invest exclusively in U.S.-dollar denominated paper.

Local currency denominated emerging markets funds have been a hot commodity in the open-ended mutual fund arena. For instance, PIMCO Developing Local Markets Bond has grown into a $5 billion offering in under three years, while stablemate PIMCO Emerging Local Bond is hauling around $1.7 billion for its part. But local-currency EM bond funds are hardly plentiful. Further, the dominant players--namely, PIMCO's funds--aren't exactly inexpensive to own. That would seem to create an opening for this forthcoming SPDR fund, which--for a time at least--will have the entire ETF field to itself.

Here's a comparison of the SPDR fund to the iShares and PowerShares ETFs...

 

PowerShares

IShares

SPDR

Index

DB Emerging Market USD Liquid Balanced

 

JPMorgan EMBI Global Core

 

Lehman Brothers Emerging Markets Local Capped

Eligible Countries

(22) Argentina, Bulgaria, Brazil, Chile, China, Columbia, Indonesia, Korea, Mexico, Panama, Peru, Philippines, Poland, Quatar, Russia, South Africa, Turkey, Ukraine, Uruguay, El Salvador, Vietnam and Venezuela

(26) Argentina, Brazil, Bulgaria, Chile, China, Colombia, Ecuador, Egypt, El Salvador, Hungary, Indonesia, Iraq, Lebanon, Malaysia, Mexico, Panama, Peru, Philippines, Poland, Russia, Serbia, South Africa, Turkey, Ukraine, Uruguay and Venezuela

(18) Brazil, China, Columbia, Czech Republic, Hungary, India, Indonesia, Malaysia, Mexico, Poland, Russia, Singapore, Slovakia, South Africa, South Korea, Taiwan, Thailand and Turkey

Currency Denomination

U.S. Dollar

U.S. Dollar

Local currency

# of Bonds

25

36

?

Minimum Maturity

3 years

2 years

1 year

Coupon Type

Fixed only

Fixed and floating

Fixed only

Minimum Issue Size

$500 million

$1 billion

?

Weighting Scheme

Equal weighting

Market value

Modified market value

Rebalancing Frequency

Quarterly

Monthly

Monthly

Index Strategy

Quasi-active (i.e., seeks to outperform pure passive)

Passive

Passive

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