Emerging Global Advisors, the New York-based money management firm focused solely on sponsoring ETFs strategies targeting the developing world, filed regulatory paperwork detailing 12 new proposed funds, including six bond funds—its first completely in-house fixed-income strategies.
The distinction of the six proposed bond funds being the firm’s first is something of a fine point, but still worthy of noting. The company has begun to reveal its fixed-income plans in the past year by putting into registration “balanced” ETFs that would make use of other fixed-income ETFs in a fund-of-funds structure.
But this week’s two filings—which also include four sector-focused equity funds, another fund that targets consumer-related companies in Asia and a dividend-focused equities fund, detail fixed-income funds that will be created in-house using individual bonds and indexes that have yet to be named.
That’s important, because Emerging Global is, ironically, a latecomer to the world of emerging market fixed-income ETFs. After all, the $2 billion WisdomTree Emerging Markets Local Debt Fund (NYSEArca: ELD) is something of a blockbuster, as is the $1.5 billion Market Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC). Both came to market in the summer of 2010.
Most of the funds are in tune with a newer approach at Emerging Global that features a particular focus on all emerging markets—as opposed to a targeting of specific countries. The granularity comes in the form of, say, style, or in the case of the bond funds, to a certain kind of bond with a fixed maturity range. Also, the plan to market income-focused funds speaks to current concerns that the post-crash era of financial repression created by central banks has made finding decent yield in the U.S. quite difficult.
Another peculiarity worth mentioning is that the four sector-focused strategies are organized as two pairs of “tactical” and “strategic” counterparts—with the distinction being that one pair would be actively managed and the other pair would be based on indexes.
When fund companies cast such a wide net at the start of the regulatory permissioning process, it often means not all the strategies will, in the end, see the light of day. But it’s also possible that the funds will all one day be launched, with Emerging Global picking its spots along the way when it senses a propitious moment for a given launch.
The proposed funds came in two filings dated May 1, 2013—neither of which named tickers or annual expense ratios. The first of the two filings included the following eight funds:
- EGShares EM Bond Investment Grade Short Term ETF
- EGShares EM Bond Investment Grade Intermediate Term ETF
- EGShares EM Bond Investment Grade Long Term ETF
- EGShares EM Dividend High Income ETF
- EGShares EM Strategic Sector Allocation ETF (passive version)
- EGShares EM Tactical Sector Allocation ETF (passive version)
- EGShares EM Asia Consumer ETF
- EGShares EM Equal Weight Sector ETF
The second filing included the following four funds:
- EGShares EM Bond Investment Grade ETF
- EGShares EM Strategic Sector Allocation ETF (active)
- EGShares EM Bond ETF
- EGShares EM Tactical Sector Allocation ETF (active)
About 70 percent of Emerging Global’s $1.36 billion in total assets under management are in one fund, the EGShares Emerging Markets Consumer ETF (NYSEArca: ECON). The fund’s assets are now about $1 billion, according to data compiled by IndexUniverse.
The proposed EGShares EM Asia Consumer ETF detailed in the first filing thus looms as a likely attempt by the firm to replicate the Midas touch of ECON in countries experiencing echo booms related to China's meteoric rise of the past 30 years.
Our annual fixed-income conference is coming up in a little more than a week and I can’t wait.
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