Lombard Odier Investment Management and ETF Securities have joined forces to launch a new ETF offering access to emerging market local government bonds. The fund has now launched on London Stock Exchange.
The fund will apply a smart beta strategy to invest in local currency denominated bonds, using fundamental factors to establish the ability of issuers to repay their debts.
The fund aims to differentiate itself from market cap based benchmarks, which reward the most leveraged borrowers. It also offers access to India and China, which tend to be excluded from market cap- based benchmarks.
The joint launch follows that of three earlier ETFs presented by LOIM and ETF Securities in April, offering investors access to Euro Corporate Bonds, Global Corporate Bonds and Global Government Bonds. All four funds are Ucits compliant.
Howie Li, co-head of CANVAS, ETF Securities comments: “Our first three products, launched in April, were well received and investors have already expressed their interest in the launch of this innovative emerging market ETF.With bond liquidity increasingly being a source of concern, investors in ETFs have extra liquidity support from the secondary market to help mitigate this. This liquidity support coupled with the ability to trade intraday makes the ETF vehicle an ideal access route into fixed income at a time when liquidity matters.”