WisdomTree Planning Three Active Foreign Bond ETFs

by on October 25, 2010

The current interest rate environment has not been kind to bond investors, who have been struggling to find opportunities for yield ever since the financial crisis began in 2008. Currently, 10 Year Treasury bonds pay around 2.5%, while investment grade corporates are paying on average in the neighborhood of 4.3%. Meanwhile, many international markets have garnered attention, thanks to rising interest rates and relatively attractive balance sheets. This has led to far juicier yields in foreign locales and has started an exodus into foreign bond ETFs. However, the current crop of ETFs covering this space leaves  much to be desired; currently there are only four funds tracking the emerging market bond sector and the same number tracking international government bonds.

WisdomTree could be headed towards changing that, laying the groundwork for a host of new funds tracking a variety of international bond markets. The company recently outlined details for ETFs offering access to the total Brazilian bond market and is now looking to offer investors access to regional bond markets as well. In a recent filing with the SEC, WisdomTree detailed its plans to launch three new active bond funds targeting the Asian, Latin American, and EMEA regions. While details are currently scarce— no information about expense ratios or ticker symbols were released–some key points regarding the funds’ methodology was made available.

WisdomTree Asia Bond Fund

This proposed fund would seek to achieve its investment objective through direct and indirect investment in debt securities issued by governments and corporations in Asian countries. The fund would focus on the developing and emerging market economies in Asia, including China, Hong Kong, India, Indonesia, South Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand.

The Asia bond fund would invest in both government and corporate bonds, including securities with varying credit risk and duration both in investment grade and junk bonds. This ETF would invest in fixed income securities denominated in the local currency of countries in Asia but may also invest in U.S. dollar denominated debt [see 2010: Year Of The Bond ETF].

WisdomTree Latin America Bond Fund

This fund will focus on securities from issuers in Brazil, Chile, Colombia, Mexico, Panama, Peru, Uruguay, and Venezuela. Much like its Asian counterpart, a proposed LatAm bond fund would invest in government and corporate bonds across a range of credit risks and durations, including junk rated debt. This fund would invest in bonds and other debt instruments issued by the governments of Latin America and their agencies and instrumentalities and as well as bonds and other debt instruments issued by corporations organized in Latin America [also read WisdomTree Files For Brazilian Bond ETF].


WisdomTree EMEA Bond Fund

This actively-managed ETF would focus in on the EMEA markets, with a spotlight on developing markets in the region. The proposed product will invest in both government and corporation debt, both investment grade and junk, in the following countries: Czech Republic, Egypt, Hungary, Israel, Poland, Qatar, Romania, Russia, Slovakia, South Africa, Turkey, and United Arab Emirates. Accodring to the filing, the fund intends to invest in bonds and other debt instruments issued by the governments in the EMEA Region and their agencies and instrumentalities, as well as bonds and other debt instruments issued by corporations organized in the EMEA Region [see Three International Bond ETFs For Europe's Bounceback].

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Disclosure: No positions at time of writing.