ETF Securities Launches Emerging Market ETF

ETF Securities has paired with Lombard Odier Investment Managers to launch an exchange traded fund (ETF) that offers investors exposure to emerging market government bonds in local currency.

The ETFS Lombard Odier IM Emerging Market Local Government Bond Fundamental GO UCITS ETF has a total expense ratio (TER) of 0.55 percent and tracks an index of debt in emerging and developed countries, selected by their creditworthiness and ability to repay their debt. Factors like gross domestic product and debt-to-GDP, as well as fiscal and political stability are taken into account. Lombard Odier will analyse each country on its own merit, and will include India and China in the list of countries.

This is the fourth ETF to be launched in conjunction with Lombard Odier, following more smart beta fixed income products in March which cover European and global corporate bonds as well as global government bonds. The fifth fund with Lombard, which tracks European government bonds, is
still to be launched as conviction in this asset class remains low with rock-bottom interest rates.

Howie Li, co-head of CANVAS, the bespoke ETF platform, at ETF Securities, said the new fund aims to be a low-cost solution but with an improved risk-adjusted return profile.

Kevin Corrigan, head of fundamental fixed income at Lombard Odier, said: “As interest rates in advanced economies remain depressed, relative valuation dynamics in emerging market debt are becoming interesting and our fundamentally weighted approach provides greater quality-focused diversification for investors.”