New Emerging Market Bond ETF

You may have heard about the recently launched Market Vectors Emerging Market Bond ETF (EMLC). I wrote an article about it for theStreet that you can read here. Generally speaking it is the first such ETF to own bonds denominated in local currency as opposed to USD and I am favorably disposed to the fund. I had another thought about the fund after double checking the edited version of the TSCM article.

It might make sense for anyone interested in this space to compare this ETF to the WisdomTree Dreyfus Emerging Currency Fund (CEW) which I own a few shares of. The duration of EMLC is about 4.5 years versus overnight and so far CEW doesn't really have a payout worth mentioning while EMLC might yield as much as 7% (yet to be seen). So in this standpoint they are different but so too are the country weightings different. CEW has 8-9% in Brazil, Chile, Mexico, China, India, Korea Taiwan, Poland, Turkey, Israel and South Africa which comprises the whole fund. The biggest difference is that EMLC is heavy in Malaysia and Thailand with no exposure to Chile.

In my opinion Chile is an important point of differentiation. Schwab tells me that there are settlement issues buying Chilean sovereign debt otherwise we would own it and I'm not sure of this difference between the funds is enough to ever matter but EMLC is weighted at the country level, for the most part, by debt outstanding so as I mention in the article Chile and its 7% debt to GDP didn't make the cut.

In all likelihood EMLC needs some time to prove itself one way or another and more so than CEW or EMLC I think if WisdomTree ends up following through with its commodity currency basket ETF, I have given up all hope on the Chilean Peso ETF it filed for a few years ago, that it would be preferable to either EMLC or CEW.

We are flying up to Oregon today. We are transporting a blind Dachshund to her new home south of Portland, then driving to Crater Lake, then moving on to Bend before visiting with friends in Portland over the weekend.