Your EM Bond ETF Might Add This Country
October 11th, 2013 at 1:15am by Todd Shriber
The iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSEArca: EMB) and the PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY) are the two largest dollar-denominated emerging markets bond ETFs with roughly $6 billion in combined assets under management.
While those ETFs qualify as “large” by nearly every reasonable metric, one country cannot be found in either fund: India. Despite being Asia’s third-largest economy and the “I” in the famous BRIC acronym, India is not a member of EMB or PCY’s lineups because, simply put, its bond markets is not as liberalized as other large emerging markets like Brazil and Russia.
However, India could be coming to EMB, PCY and other emerging markets bond ETFs in the future. On Thursday evening, Reuters reported that India is in talks with J.P. Morgan, Barclays and Citigroup about gaining entry into those banks’ emerging markets bond indices. India’s preference is to get into the JPMorgan index, but authorities are also in touch with other index operators such as Barclays and Citi, Reuters reported, citing unidentified sources.