WisdomTree launches actively managed global corporate bond ETF

Jan 31st, 2013 | By | Category: Fixed Income

WisdomTree, a US-based exchange-traded fund (ETF) sponsor with over $20 billion in asset under management, has announced the launch of the actively managed WisdomTree Global Corporate Bond ETF (GLCB). Sub-advised by fixed income specialists Western Asset, the fund invests in corporate fixed income securities from around the world.

WisdomTree launches actively managed global corporate bond ETF

The WisdomTree Global Corporate Bond ETF (GLCB) provides exposure to US, international and emerging market bonds.

The fund will seek to maintain at least 55% of its holdings in investment grade assets, with the ability to also invest in US and international high yield as well as emerging market corporate debt.

With an intermediate-term duration target of between 2 and 10 years and a bias towards investment grade, the fund is positioned as a core fixed income holding for US dollar-referenced investors (the fund intends to hedge non-US currency exposure back to dollars).

Luciano Siracusano, Chief Investment Strategist at WisdomTree, said: “We believe fixed income investors should not limit themselves to a domestic universe of corporate debt securities when an expanding $11.2 trillion global credit market presents robust opportunities in our increasingly global economy.”

Siracusano added: “We believe a broad global approach incorporating active credit analysis presents an opportunity to manage risk, liquidity and find opportunities for relative value over changing credit and interest rate cycles. In contrast to market capitalisation-based fixed income index funds, GLCB is an actively managed ETF designed with the flexibility to invest – and rotate – across fixed income sectors and issuers around the world.”

The fund follows the WisdomTree Emerging Markets Corporate Bond ETF (EMCB), which launched in March last year, as the sponsor’s second credit fund to be sub-advised by Western Asset.

Western Asset’s active approach begins with a top-down assessment of the global economy by examining country- and industry-specific risks. However, bottom-up company and industry analysis is what truly drives investment selection. Western Asset focuses on identifying the sectors and companies that offer relative value in the context of the risk they entail.

Commenting on the strategy, Ryan Brist, Portfolio Manager at Western Asset, said: “We believe the strong balance sheets of multinational corporations, continued demand for new corporate issuance and the persistence of low interest rates around the world present attractive opportunities in global credit markets. Western Asset manages more than $115 billion in this asset class and we are excited to bring our expertise to a global corporate strategy in the ETF structure.”

The fund has been listed on the Nasdaq market and comes with a net expense ratio of 0.45%.

UK and European investors looking for something similar, in terms of exposure to global corporate bonds, could consider the iShares Global Corporate Bond ETF (CORP). This fund tracks the Barclays Global Aggregate Corporate Bond Index, a broad-based measure of global investment grade fixed-rate corporate debt. The fund’s investable universe encompasses more than 7,000 high-quality corporate bonds across over 30 countries and 15 currencies.

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