Why EM Bonds?
FRAN RODILOSSO: While emerging markets still have lower debt-to-GDP ratios than developed markets, the emerging markets bond universe is still becoming an increasingly important part of the global debt universe. That universe has shifted in terms of its make-up over the last three, five, and 10 years. Corporate debt has become a much more important part of the universe, and even more significantly, so has local currency debt.
What is EMAG?
RODILOSSO: EMAG, Market Vectors Emerging Markets Aggregate Bond ETF; it's a fixed-income ETF that seeks to track the performance and yield of the Market Vectors EM Aggregate Bond Index (MVEMAG). The Market Vectors EM Aggregate Bond Index is comprised of sovereign and corporate hard currency and local currency debt. It encompasses the broad opportunity set within the emerging markets fixed-income space.
RODILOSSO: EMAG is the first ETF to offer comprehensive exposure to the emerging markets fixed-income universe. There are many ETFs in the marketplace today that offer exposure to various parts of the emerging markets universe. But, for investors who would like a mix of sovereign and corporate local and hard currency, EMAG offers a unique opportunity to capture all that exposure through one investment.
Diversification of EMAG
RODILOSSO: To give you a perspective on the level of diversification within EMAG’s underlying Index, there are more than 600 issuers from over 60 countries, with bonds denominated in over twenty currencies.
As of November 30, 2013, the Market Vectors EM Aggregate Bond Index is approximately 50% local currency and 50% hard currency. Approximately 70% of the issuers in the Index are also rated by at least one agency as investment-grade issuers. Interestingly as well, 35% of the Index are hard currency corporate issuers; 37% overall corporate. Only 18% of the Index, as of November 30, 2013, is represented by hard currency sovereign bonds. This is significant because a lot of the money benchmarked to EM debt today is benchmarked largely to the EM hard currency sovereign debt universe, which is a shrinking component of EM, as it has been for the last decade. As for the local currency corporate component of the Index, it is less than 2% of the Index. However, we believe that local currency corporate debt within emerging markets will become an increasingly significant part of the universe.
EMAG: No assembly required
RODILOSSO: EMAG offers a way for investors to gain broad exposure to emerging markets fixed-income, both hard currency and local currency, in their portfolios.
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The Market Vectors EM Aggregate Bond Index is comprised of sovereign bonds and corporate bonds denominated in U.S. dollars, Euros or local emerging markets currencies, and includes both investment grade and below investment grade rated securities.
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.
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