VanEck lowers fees on EM local currency bond ETF

Apr 25th, 2017 | By | Category: Fixed Income

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VanEck has lowered the fees charged for its VanEck Vectors JP Morgan EM Local Currency Bond ETF (LON: EMLC). As of 26 April 2017, EMLC and its US-listed equivalent (NYSE: EMLC) saw their total expense ratios fall from 0.47% to 0.44%.

VanEck lowers fees on EM local currency bond ETF

Fran Rodilosso, head of fixed income ETF portfolio management at VanEck.

The ETFs track the JP Morgan GBI-EM Global Core Index, a reference for the performance of bonds issued in local currencies by 16 emerging market governments: Argentina, Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, Mexico, Peru, Philippines, Poland, Romania, Russia, Thailand, Turkey, and South Africa. The funds trade in US dollars.

The index is market-cap weighted and rebalanced monthly, with individual country exposure capped at 10% to enhance diversification. A country floor of 3% is also applied.

The US-based fund has attracted approximately $1.8 billion of inflows since January 2016 and, as of 31 March 2017, had over $3.0bn in assets under management.

Fran Rodilosso, head of fixed income ETF portfolio management at VanEck, commented: “Investor interest in emerging markets bonds has continued this year due to their attractive yield potential and the stabilization and improvement in many emerging markets economies, which in the case of bonds denominated in local currencies may provide investors with the opportunity to benefit from currency appreciation.”

According to VanEck, EMLC’s fees were reduced to allow investors to benefit from the economies of scale resulting from the significant asset growth over the past year. The recently launched European version followed suit to align the fund with its US counterpart.

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