A lightly traded ETF that has captured our attention this week due to recent asset inflows is iShares Emerging Markets Local Currency Bond (NYSEArca: LEMB).
Having debuted a little over a year ago in October of 2011, the fund has attracted more than $150 million in net inflows in slightly over one week.
The fund only typically trades about 28,000 shares on an average daily basis, so it likely evades the attention of the majority of portfolio managers out there whom may be screening the ETF landscape by average daily volume and/or assets under management. [Emerging Market Bond ETF: Less Debt, Higher Yield]
However, LEMB does have north of $360 million under AUM currently, despite the trading volume that is on the “lower” end and it is likely attracting more attention with the recent asset inflows as it is clearly on someone’s radar.
LEMB tracks the Barclays Capital Emerging Markets Broad Local Currency Bond Index, which is a measure of the performance of sovereign bonds denominated in local currency markets of the various component countries.
Currently, top holdings of LEMB involve sovereign issues from Brazil (11.71%) South Korea (9.49%), and Turkey (3.50%), and other Emerging economies including the likes of Malaysia, Hungary, Israel, South Africa, Colombia, Mexico, Poland, Russia, Thailand, Indonesia, Philippines, and the Czech Republic for instance.
Yielding 3.74% (30 day SEC Yield) at the moment, this fact is also likely a draw to institutional managers whom are looking for “risk on” type exposure in sovereign bonds via an ETF.
Related ETFs that may also be in play here include EMB (iShares JP Morgan USD Emerging Markets Bond), PCY (PowerShares Emerging Markets Sovereign Debt Portfolio), ELD (WisdomTree Emerging Markets Local Debt), and EMLC (Market Vectors Emerging Markets Local Currency Bond).
iShares Emerging Markets Local Currency Bond
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