ProShares launches short-term emerging markets bond ETF on BATS

Nov 26th, 2013 | By | Category: Fixed Income

ProShares, a US-based provider of exchange-traded funds best known for its leveraged long and short ETF line-up, has announced the launch of the ProShares Short Term USD Emerging Markets Bond ETF (EMSH) on the BATS Exchange.

ProShares launches short-term emerging markets bond ETF on BATS

ProShares’ new ETF is the first short-term emerging markets bond ETF in the United States.

The ETF is the first short-term emerging markets bond ETF in the United States and is designed to offer attractive yield potential with reduced interest rate sensitivity.

Michael Sapir, Chairman and CEO of ProShare Advisors LLC, ProShares’ investment advisor, said: “Investors concerned about rising interest rates have been flooding into short term bond ETFs. We are pleased to introduce the nation’s first short term emerging markets bond ETF, which offers exposure to this attractive-yielding asset class while limiting the impact of rising interest rates.”

The ETF tracks the DBIQ Short Duration Emerging Market Bond Index, an index developed by German investment banking giant Deutsche Bank.

The index is composed of a diversified portfolio of USD-denominated emerging markets bonds that have less than five years remaining to maturity that are issued by emerging markets sovereign governments, non-sovereign government agencies and entities, and corporations with significant government ownership, so-called quasi-sovereigns.

Those countries qualifying as emerging markets are determined by the index provider; the index currently includes bonds from sovereigns or other qualifying entities domiciled in 19 such countries.

Eligible bonds will also have a minimum face amount outstanding of $500 million. Callable, putable, zero coupon, inflation-linked and convertible bonds, among others, will be excluded. The index includes both investment grade and high yield securities and will include bonds, in the aggregate, that have a dollar weighted average years-to-maturity of three years or less.

The index maintains certain issuer weight caps for diversification purposes, including limiting the weights of issuers from any particular country to no more than ten percent (10%) of the index. The index is reconstituted and rebalanced on a quarterly basis; cash from maturing issues or coupon payments is reinvested monthly.

The fund has an expense ratio of 0.50% and is ProShares’ fifth ETF listed on the BATS Exchange.

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