BEST NEW INTERNATIONAL/GLOBAL FIXED INCOME ETF
WINNER: Global X Emerging Markets Bond ETF (EMBD)
The Global X Emerging Markets Bond ETF (EMBD) made its entrance onto the actively managed emerging market bond ETF scene in a tried and true way: by undercutting the competition.
With a 0.39% expense ratio, EMBD has a lower price tag than the next-cheapest ETF in the space, the iShares Interest Rate Hedged Emerging Markets Bond ETF (EMBH), with its 0.47% expense ratio. It’s also significantly cheaper than the largest fund in the space, the First Trust Emerging Markets Local Currency Bond ETF (FEMB), with its 0.85% expense ratio.
EMBD, along with its competitors, takes an active approach to investing in emerging market bonds. But while some of the others may focus on certain parts of the market—such as local currency or dollar-denominated bonds specifically—EMBD plays in all of those areas (though with a focus on USD-denominated bonds). It also diversifies across fixed-rate and floating-rate debt instruments, as well as sovereign, quasi-sovereign and corporate issues.
In other words, EMBD is a solid option for broad exposure to the emerging market bond space with a category-low fee. The fund has $90 million in assets under management after nine months on the market.
BEST NEW ESG ETF
WINNER: TrueShares ESG Active Opportunities ETF (ECOZ)
The TrueShares ESG Active Opportunities ETF (ECOZ) took the top prize for ESG ETFs for 2020, offering an actively managed take on the environmental, social and governance space. TrueMark’s two-tiered approach to the portfolio combines rigorous ESG and fundamental analysis in order to select securities from the U.S. large cap segment that have an overall positive effect on the world around us while also exhibiting the potential for future positive performance.
The TrueMark website notes that ECOZ’s methodology puts a “particular emphasis” on companies’ carbon footprints, but the prospectus also mentions that companies are evaluated on their promotion of leadership diversity and their practices with regard to hiring employees from marginalized groups.
The firm uses both in-house analysis and third-party sources to evaluate companies based on their ESG characteristics. Ultimately, TrueMark establishes a selection universe of 100-150 companies based on ESG standards before using a relative value score to select a final portfolio of 75-125 securities.
Active management has always been problematic in the ESG space, where transparency is valued. Investors who care about ESG standards generally want to know where their dollars are invested. As an actively managed ETF with a traditional disclosure schedule (unlike a mutual fund or nontransparent ETF) ECOZ discloses its holdings daily.