BondBloxx launches target duration EM debt ETF

Jul 6th, 2022 | By | Category: Fixed Income

Fixed income ETF specialist BondBloxx Investment Management has unveiled its latest innovation, an emerging markets government bond fund targeting debt with average lives under ten years.

Tony Kelly, co-Founder of BondBloxx Investment Management

Tony Kelly, co-Founder of BondBloxx Investment Management.

The BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF (XEMD US) has been listed on Cboe BZX Exchange with an expense ratio of 0.29%.

The fund is linked to the JP Morgan EMBI Global Diversified Liquid 1-10 Year Maturity Index which is derived from the flagship JP Morgan EMBI Global Diversified Index.

The parent universe includes US dollar-denominated fixed and floating-rate debt securities issued by sovereign and quasi-sovereign entities in emerging market countries.

Whole countries can be removed from the universe if their Gross National Income per capita is above JP Morgan’s Index Income Ceiling (currently $20,938) or if their long-term foreign currency sovereign credit rating is “A-“ or above for three consecutive years.

The ETF’s index, meanwhile, only includes securities with at least $1 billion par outstanding (compared to $500 million for the parent universe) and a time to maturity between six months and ten years.

Constituents are weighted by market value while capping the weight of any country at 10% to reduce the influence of sovereigns with significant debt stocks.

BondBloxx made its debut in February by introducing a suite of ETFs providing exposure to high yield corporate bonds while diversifying and managing risk according to industry exposure. The firm has also launched a trio of funds targeting specific credit buckets within the high yield corporate bond segment.

Tony Kelly, co-Founder of BondBloxx Investment Management, said: “Today’s volatile markets present more challenges than ever for fixed income investors. At BondBloxx, we’re working for, and with, investors to develop new products that address these challenges – like providing more control over duration risk.”

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