Checking In: EM Bonds And Currency, Oh My
Typically, we reserve “Checking In” space for ETFs that are less than a year old so we're cutting it close with the Market Vectors Emerging Markets Local Currency Bond ETF (NYSE: EMLC), which celebrates its first birthday on Saturday.
Some bond ETFs rarely gain the attention that equity- or commodities-based ETFs attain and EMLC is no exception as it can be argued this an “under the radar” play, but nonetheless, the ETF has become a solid option for investors seeking exposure to multiple themes. Be it the rising strength of emerging market currencies against the U.S. dollar or the improving credit ratings on EM sovereign debt issues, EMLC is a sound idea for getting exposure to both concepts.
Investors have taken notice. While EMLC doesn't dominate the ETF headlines, the fund has accumulated $437.6 million in assets under management, according to data on the Market Vectors Web site, an absolutely stellar haul in just one year of trading.
Home to 183 issues, EMLC is diverse both geographically and in terms of how its holdings are dispersed. Eastern Europe, Latin America and Southeast Asia all figure prominently in EMLC's mix and no country accounts for more than 10.06% of the ETF's weight.
The top allocation goes to South Africa, followed by Brazil, Mexico, Poland, Turkey and Malaysia. Thailand, Indonesia, Hungary and Russia round out the the top-10 country weights.
EMLC impresses in another way. The arena for ETFs tracking emerging markets bonds is far from empty. It's actually quite well populated and even when removing the funds that track EM bonds denominated in U.S. dollars, EMLC still faces competition in the form of the SPDR Barclays Capital Emerging Markets Local Bond ETF (NYSE: EBND) and the WisdomTree Emerging Markets Local Debt Fund (NYSE: ELD).
Kudos to EMLC as it has outperformed both EBND and ELD over the past year. Plus, it doesn't hurt that bond giant Pimco has extolled a bullish view on EM bonds, an endorsement that could help EMLC going forward.
A move above resistance at $28, the 52-week high, would put EMLC in rally mode through year-end.
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