Local Currency Bond ETF for Emerging Markets
Van Eck, the ETF sponsor firm, has impressed investors with their ability to discover growing and profitable emerging markets from around the world. The firm recently released the Market Vectors Emerging Markets Local Currency Bond ETF (EMLC). The EMLC's aim is to mimic the price and yield of the JP Morgan GBI-EMG Core Index which tracks the performance of local currency bonds issued by the governments of emerging markets.
The fund features a number of emerging markets, but the top country weightings are capped at 10 percent each, such as for South Africa, Poland, Brazil, Mexico, Malaysia and Thailand. Investing in emerging markets can be risky though, and Van Eck points out that some of the risks include expropriation, political instability, armed conflict and social instability, limitations of foreign ownership, confiscatory taxation and issues with repatriation of investment income.