The ETF landscape continues to grow and change, and this time, it’s Neuberger Berman adding to the space. The asset manager has launched the Neuberger Berman Emerging Markets Debt Hard Currency ETF (NEMD), adding to its approximately 13-strong ETF list. The strategy boosts the company’s relatively smaller fixed income ETF suite.
Per its prospectus, NEMD’s emerging markets debt ETF approach charges a 60 basis point fee for its approach. The strategy looks for high total return levels via income and capital appreciation. Its strategy entails investing at least 80% of its net assets in debt and other emerging markets-issued debt, denominated in hard currencies. Specifically, those investable options include debt from both issuers in emerging markets and those that receive a majority of revenue from emerging markets. The ETF also applies derivatives where needed for the strategy’s debt focus, as well.
NEMD considers hard currencies to include globally-traded currencies from industrialized nations. That includes the U.S. dollar, the Euro, and currencies from the G-7. It may invest in opportunities from sovereign, supranational, and corporate issuers. That includes debt of any maturity, duration, or credit rating. In addition, it considers bonds, notes, convertible securities, loans and related assignments, money market instruments, and more.
The ETF’s managers apply fundamental research when examining issuers in making their moves. Furthermore, its management team considers trends in economic conditions, region, country, and sector fundamentals, ESG factors, and more.
What role, then, might the strategy play in investor portfolios? Its focus on emerging sovereign and quasi-sovereign credit can offer some appealing yields. Its bottom up approach leans on its managers’ expertise, as well, identifying the strongest contenders. That could make for a valuable tool given the lack of information about foreign markets. Looking ahead, the emerging markets debt ETF could intrigue, especially as the U.S. debt outlook changes.
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