Market Vectors ETFs today announced the launch of its newest ETF, Market Vectors® Emerging Markets Aggregate Bond ETF (NYSE Arca: EMAG), completing the conversion announced in October of the Market Vectors® LatAm Aggregate Bond ETF (NYSE Arca: BONO) into this new fund.
EMAG seeks to track, before fees and expenses, the price and yield performance of the Market Vectors® EM Aggregate Bond Index (MVEMAG), which includes the four major categories of emerging markets bonds: 1) U.S. dollar and Euro denominated sovereigns; 2) local currency sovereigns; 3) U.S. dollar and Euro denominated corporates; and, 4) local currency corporates. The index is also diversified across credit qualities, with approximately 70% of the underlying constituents currently receiving investment grade ratings, and across currencies, with approximately half of the index currently made up of bonds issued in U.S. dollars or Euros and the other half in local emerging markets currencies.
The index is also diverse from a geographic perspective and continues to include Latin American debt as an important component, as well as debt from Africa, Asia, Eastern Europe, and the Middle East. As of November 30, 2013, Mexico (with a weighting of 9.78 percent), Brazil (9.46 percent), Russia (9.30 percent), China (6.73 percent), and Poland (5.36 percent) represented the five largest country weightings in the index.
“We’re very excited to launch EMAG, which offers the most comprehensive exposure to emerging markets bonds currently available in the ETF space,” said Ed Lopez, Marketing Director with Market Vectors ETFs. “Extrapolating on the type of exposure originally offered on a regional level through BONO makes sense as investors seek more broadly diversified vehicles. We believe investors will also be drawn to the fund’s currency diversification, which may help reduce volatility, as well as to its credit quality diversification, which may help reduce risk.”
Lopez noted that in recent years, the economies of many emerging markets issuers have improved relative to their developed markets counterparts. As this has occurred, emerging markets issuers have become more creditworthy, experiencing upgrades while some developed markets have seen downgrades, and bond yields have compared favorably to those of comparable bonds from developed markets.
Market Vectors notes that investing in emerging markets debt comes with associated risks, including credit risk, interest rate risk, foreign currency risk, risks associated with investing in high yield securities, risks associated with investing in foreign securities, and more.
Van Eck’s Market Vectors ETF family also includes several other emerging markets debt-focused offerings, including Emerging Markets High Yield Bond ETF (NYSE Arca: HYEM), Emerging Markets Local Currency Bond ETF (NYSE Acra: EMLC), and Renminbi Bond ETF (NYSE Arca: CHLC).
EMAG has a gross expense ratio of 1.26 percent and a net expense ratio of 0.49 percent, which are the same expense ratios that had been associated with BONO, with the net expense ratio capped until at least September 1, 2015. Shareholders in BONO do not need to take any action, as their shares will automatically be converted from BONO to an equal amount of shares of EMAG.
About Market Vectors ETFs
Market Vectors exchange-traded products have been offered since 2006 and span many asset classes, including equities, fixed income (municipal and international bonds) and currency markets. The Market Vectors family totaled $23.7 billion in assets under management, making it the seventh largest ETP family in the U.S. and 10th largest worldwide as of October 31, 2013.
Market Vectors ETFs are sponsored by Van Eck Global. Founded in 1955, Van Eck Global was among the first U.S. money managers helping investors achieve greater diversification through global investing. Today, the firm continues this tradition by offering innovative, actively managed investment choices in hard assets, emerging markets, precious metals including gold, and other alternative asset classes.
There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. Debt securities carry interest rate and credit risk. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. The Fund’s underlying securities may be subject to call risk, which may result in the Fund having to reinvest the proceeds at lower interest rates, resulting in a decline in the Fund’s income.
Market Vectors EM Aggregate Bond Index (the “Index”) is the exclusive property of Market Vectors Index Solutions GmbH (the “Index Provider”), which has contracted with Solactive AG (the “Calculation Agent “) to calculate the Index. The Calculation Agent is not an adviser for or a fiduciary to any account, fund or ETF managed by Van Eck Associates Corporation. The Calculation Agent is not responsible for any direct, indirect, or consequential damages associated with indicative optimized portfolio values and/or indicative intraday values. Market Vectors Emerging Markets Aggregate Bond ETF (the “Fund”) is not sponsored, endorsed, sold or promoted by the Index Provider, which makes no representation regarding the advisability of investing in the Fund.
Principal International and Emerging Markets Risk Factors: Fixed income securities are subject to credit risk and interest rate risk. High yield bonds may be subject to greater risk of loss of income and principal and are likely to be more sensitive to adverse economic changes than higher rated securities. International investing involves additional risks which include greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foreign governments, decreased market liquidity and political instability. Changes in currency exchange rates may negatively impact the Fund’s return. Investments in emerging markets securities are subject to elevated risks which include, among others, expropriation, confiscatory taxation, issues with repatriation of investment income, limitations of foreign ownership, political instability, armed conflict and social instability. Investors should be willing to accept a high degree of volatility and the potential of significant loss. Diversification does not assure a profit nor protect against loss. Please see the Market Vectors Emerging Markets Aggregate Bond ETF (the “Fund”) prospectus for full disclosure information.
The “net asset value” (NAV) of an ETF is determined at the close of each business day, and represents the dollar value of one share of the ETF; it is calculated by taking the total assets of an ETF subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as an ETF's intraday trading value. Investors should not expect to buy or sell shares at NAV. Total returns are based upon closing “market price” (price) of the ETF on the dates listed.
Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker‐dealers in large, specified blocks of shares called “creation units” and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market.
Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 888.MKT.VCTR or visit marketvectorsetfs.com. Please read the prospectus and summary prospectus carefully before investing.
Not FDIC Insured — No Bank Guarantee — May Lose Value
Van Eck Securities Corporation, Distributor, 335 Madison Avenue, New York, NY 10017
Mike MacMillan/Chris Sullivan, 212-473-4442
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