iShares to Launch Emerging Market Corporate Bond ETF

April 18th at 8:10am by Tom Lydon

BlackRocks exchange traded fund branch iShares will reportedly launch a new corporate bond ETF that focuses on emerging market companies Thursday. More ETFs are opening up emerging market debt as a new asset class for investors.

According to the fund prospectus, the iShares Emerging Markets Corporate Bond Fund (BATS: CEMB) will try to reflect the performance of the Morningstar Emerging markets Corporate Bond Index, which follows U.S. dollar-denominated emerging market corporate bonds. Component securities are rebalanced monthly and country weightings are rebalanced annually. CEMB has an expense ratio of 0.60%.

BlackRock will list the new ETF on Thursday, Benzinga reports.

Emerging market countries will include those from Latin Americas, Eastern Europea, Middle East, Africa and Asia (excluding Japan). As of March 31, 2012, Index issuers included those located in Brazil, Chile, China, Colombia, Hong Kong, India, Indonesia, Israel, Jamaica, Kazakhstan, Kuwait, Malaysia, Mexico, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Thailand, Trinidad and Tobago, Turkey, Ukraine, United Arab Emirates and Venezuela.

Component sectors include energy, financial and industrial companies.

The fund may invest 80% of its assets in securities of the Underlying Index and depositary receipts representing securities of the Index, along with 20% of its assets in certain futures, options and swap contracts, cash and cash equivalents.

It should be noted that that there are no ratings restrictions on either the individual bonds or the country of risk.

The new fund will expand iShares’s recent slew of new fixed-income ETF offerings. Additionally, CEMB will be competing directly with the recently launched WisdomTree Emerging Markets Corporate Bond Fund (NasdaqGM: EMCB). [iShares Lists New High-Yield ETFs]

For more information on new ETF products, visit our new ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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