WisdomTree launches actively managed Emerging Markets Corporate Bond ETF

Mar 8th, 2012 | By | Category: Fixed Income

WisdomTree, a US-based ETF provider, has announced the launch of the WisdomTree Emerging Markets Corporate Bond ETF (EMCB).

WisdomTree launches active Emerging Markets Corporate Bond ETF

EM corporate bonds are supported by favourable growth rates, attractive demographics, and strong fundamentals.

EMCB provides broad-based exposure to corporate bonds of emerging market issuers across Asia, Latin America, Eastern Europe, Africa and the Middle East.

EMCB is listed on the NASDAQ Stock Market with an expense ratio of 0.60%.

Commenting on the launch, Bruce Lavine, President & COO of WisdomTree, said: “WisdomTree is pleased to offer the first corporate bond ETF that offers access to a rapidly growing asset class, the debt of a broad array of quality corporate issuers in the emerging markets.   These bonds are supported by the same favourable growth rates, attractive demographics, and improving fundamentals which have driven strong relative returns in emerging market assets in general.”

“We are equally pleased to tap the expertise of Western Asset Management Company, one of the world’s leading fixed income managers, as sub-advisor to the fund,” Lavine added.  Western Asset is a subsidiary of Legg Mason.

Investment-grade emerging market corporate bonds have historically offered a significant yield premium compared to similarly rated US corporate securities.  EMCB will seek to maintain at least 65% of its holdings in investment-grade assets with intermediate-term duration between 2 and 10 years.

Commenting on the strategy, Matthew Duda, EMCB Portfolio Manager of Western Asset, said: “While the investment process begins with an assessment of the macro and country-specific risks, company-specific factors may drive emerging market corporate bond returns to a larger extent than country-level issues as sovereign risk trends lower in this asset class over time.

“We therefore combine top-down macroeconomic analysis with bottoms-up fundamental analysis of the industries and corporations essential to the ongoing industrialisation and development of the emerging world.”

Currently, the fund’s top three country exposures are Brazil, Russia and Mexico, with weights of 25.5%, 17.4% and 11.6% respectively. In terms of industries, Oil & Gas is top with a weight of 30.5%, Iron & Steel is second with 8.7% and Telecommunications is third with 8.1%.

EMCB is the industry’s first broad-based, emerging market corporate bond ETF.  The actively managed ETF is also the first product to be launched in connection with WisdomTree’s sub-advisory relationship with Western Asset Management.

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