Daily ETF Watch: New ProShares Bond ETF

November 21, 2013

ProShares serves up an emerging market bond ETF appropriate for an era of rising rates.

ProShares today is launching a short-dated, dollar-denominated emerging market bond ETF, serving up a trio of features in a single wrapper that stands to serve its owners well at a time when rates appear to be on the verge of rising and investors are scouring the globe for decent yield.

The ProShares Short Term USD Emerging Markets Bond ETF (EMSH) will start trading today on the BATS exchange, a new primary listing for the No. 3 U.S. stock exchange.

Emerging markets are currently facing stiff head winds stemming from the fact that the Fed Reserve looks likely to soon begin reversing five years of ultra-easy monetary policy. Suddenly, a host of emerging-market liabilities are in focus, including flagging demand in the developed world, inadequate internal demand within the developing world, inefficient state-owned enterprises that are a drag and, not least, spiking wage and goods inflation.

All those factors have helped torpedo returns in recent months for an asset class that has been superior in terms of performance pretty much since the technology bubble burst.

In other ETF-related news, today’s regulatory traffic includes the following:

  • Horizons has filed exemptive relief with regulators to offer self-indexed funds as well as alternative funds (long/short and 130/30 funds). Prefinancial crisis 130/30 strategies were popular. Managers in these strategies who were 100 percent long shorted a portion of their portfolios that they believed was undervalued and then bought additional long positions from their short-sale proceeds.



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