EGShares, TCW Partner on EM Bond ETFs

January 7th at 4:21pm by Max Chen

Mutual fund provider TCW is partnering up with Emerging Global Advisors, the exchange traded fund provider known for its line of EGShares emerging market strategies, to launch a suite of EM fixed-income ETFs with varying duration targets.

The EGShares TCW EM Short Term Investment Grade Bond ETF (NYSEArca: SEMF), EGShares TCW EM Intermediate Term Investment Grade Bond ETF (NYSEArca: IEMF), and EGShares TCW EM Long Term Investment Grade Bond ETF (NYSEArca: LEMF) are expected to begin trading on Tuesday, January 8th.

Marten Hoekstra, chief executive of Emerging Global Advisors, commented on how U.S investors have been able to tailor duration of domestic fixed-income ETF portfolios to meet their investment objectives, and now, investors can do the same with emerging market bonds, reports Chris Flood for Financial Times.

David Lippman, chief executive of TCW, which manages $10 billion across four active emerging market debt mutual funds, has found that working with ETFs can provide significant value to investors in emerging market debt.

TCW is “very optimistic” on long-term emerging market debt due to strong fiscal and debt positions of many developing world governments. Lippman also added that the higher yields from the emerging market ETFs would provide “a compelling trade” when compared to U.S. debt with comparable maturities. [Emerging Markets Bond ETFs Look to a Better 2014]

According to a SEC filing, the three new ETFs will passively try to reflect the performance of a J.P. Morgan Custom Emerging Market Index, which hold investment grade U.S. dollar-denominated emerging market sovereign and corporate bonds.

Specifically, the short-duration SEMF ETF will track bonds with remaining maturities between 1 and 3 years. The intermediate-duration IEMF ETF will follow bonds with remaining maturities between 4 and 8 years. Lastly, the long-term LEMF ETF is comprised of bonds with remaining maturities of over 8 years.

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