PowerShares EM Local Currency Debt ETF Debuts Thursday
Invesco's (NYSE: IVZ) PowerShares unit, the fourth-largest U.S. ETF issuer, is slated to introduce the PowerShares Fundamental Emerging Markets Local Debt Portfolio (NYSE: PFEM) on Thursday.
The PowerShares Fundamental Emerging Markets Local Debt Portfolio, which will charge an annual expense ratio of 0.5 percent, enters a corner of the ETF market fraught with competition.
The new PowerShares ETF will tussle with popular emerging markets local currency bond funds such as the WisdomTree Emerging Markets Local Debt Fund (NYSE: ELD). ELD is the second-largest actively managed ETF with $2.05 billion in assets under management.
Other popular emerging markets bond funds with holdings denominated in local currencies include the $1.5 billion Market Vector Emerging Markets Local Currency Bond ETF (NYSE: EMLC) and the $645.3 million iShares Emerging Markets Local Currency Bond Fund (NYSE: LEMB).
The new PowerShares fund will track a Research Affiliates index, the Citi RAFI Bonds Sovereign Emerging Markets Extended Local Currency Index, which screens constituents on the following factors: GDP, population, land area and energy use, according to Index Universe.
PowerShares currently offers several ETFs based on fundamentally-weighted indexes provided by Research Affiliates, including the $1.82 billion PowerShares FTSE RAFI US 1000 Portfolio (NYSE: PRF) and the $381.6 milllion PowerShares FTSE RAFI Emerging Markets Portfolio (NYSE: PXH).
PowerShares already has a sizable footprint in the emerging markets bond ETF arena with the U.S. dollar-denominated PowerShares Emerging Markets Sovereign Debt Portfolio (NYSE: PCY). That ETF has $2.64 billion in assets.
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