Global X launched its first actively managed ETF this morning, which will seek to provide exposure to sovereign and corporate emerging market debt. Believing that this segment of the market was relatively untapped by ETFs, Global X is hoping that the higher-yielding asset class will resonate with investors as traditional bond yields remain low.
The Global X Emerging Markets Bond ETF (EMBD) will be sub-advised by Global X affiliate, Mirae Asset Global Investments.
Noting the importance of navigating liquidity, mitigating potential downside risks, and the necessity of understanding idiosyncratic behaviors in these markets, Global X recognized the need for an emerging markets bond strategy to incorporate active management. Leaning upon the extensive experience of Mirae Asset, the fund will be managed by two Mirae portfolio managers. With an expense ratio of 0.39% the fund (EMBD) will be priced more similarly to the passive vehicles in this space.
EMBD aims to provide investors with strategic exposure to the growing universe of emerging market debt. With a total market size of $26 trillion, emerging market debt represents more than 20% of the global bond market and is a common fixture in income-oriented portfolios.The Fund primarily invests in emerging market debt securities denominated in U.S. dollars, however, the Fund may also invest in those denominated in applicable local foreign currencies. Securities may include fixed-rate and floating-rate debt instruments issued by sovereign, quasi-sovereign, and corporate entities from emerging market countries.
EMBD will utilize the expertise of tenured Mirae Asset portfolio managers Joon Hyuk Heo and Ethan Yoon, who have combined industry experience totaling more than 35 years. The portfolio managers are supported by more than 20 professionals around the globe from Mirae Asset’s Investment, Global Macroeconomic Strategy, and Emerging Markets Research Teams. EMBD’s country allocation will be based on factors including, but not limited to, economic indicators and conditions, industry structure, terms of trade, political environment and geopolitical issues. The portfolio managers will additionally seek to identify potential corporate and sovereign opportunities in support of bolstering EMBD’s risk-adjusted returns.
Luis Berruga, CEO of Global X ETFs, said with this new launch, they are seeking to combine the expertise of seasoned emerging market investors with the efficiency, transparency, and tradability of an ETF.
“The core pillar of our business is on delivering products that will serve as solutions for investors’ needs – it is our belief that the best way to access this important income-oriented asset class is through active management. We believe the intimate knowledge and research that Joon Hyuk and Ethan have developed over their careers, combined with extensive support across the Mirae Asset organization, should be a crucial advantage for our investors in accessing these ever-changing markets. We’re thrilled to bring their skillset to our investors.”
In partnering with Mirae Asset’s experienced team, Global X aims to provide investors with a rigorously designed and managed investment solution in a traditionally difficult-to-access segment of the market. EMBD will capitalize on the extensive experience of Mirae Asset’s fixed income team, and pair it with the client-focused approach that underpins Global X ETFs, with a competitive 0.39% expense ratio.
The Fund will join Global X’s Income suite of ETFs, which includes 17 other funds offering exposure to high dividend payers, preferreds, MLPs & energy, and covered call strategies.