iShares Set To Launch Emerging Markets Corporate Bond Fund (CEMB)

by on April 18, 2012 | ETFs Mentioned:

iShares is continuing to beef up it product lineup with plans to launch a corporate bond ETF focusing on debt from emerging markets issuers. The Emerging Markets Corporate Bond Fund (CEMB) is set to debut later this week on Thursday, April 17th, on the BATS Exchange. The new fixed income offering will join the growing family of over 270 iShares ETFs, showcasing the sheer size and popularity of this industry veteran [see Free Report: How To Pick The Right ETF Every Time]. 

The Emerging Markets Corporate Bond Fund will be the latest product from iShares to be listed on the quickly growing BATS Exchange. For those not familiar, BATS is the third largest market operator in the United States, trailing NYSE Euronext and Nasdaq OMX. Similar to how ETF issuers are trying to attract money from mutual funds, BATS is also aggressively competing on cost [see also iShares Launches More High Yield ETFs]. 

Under The Hood: CEMB

The new bond ETF from iShares will offer investors the opportunity to round out their portfolio’s fixed income component with emerging markets exposure. CEMB will be linked to the Morningstar Emerging Markets Corporate Bond Index, which consists of bonds issued by corporations and quasi-sovereign corporations (more than 50% government ownership) from a range of emerging markets.The underlying securities are all U.S. dollar-denominated fixed-rate bonds with a remaining maturity of 13 months or more at the time of re-balancing, and a minimum of 36 months to maturity or greater at the time of issuance [see also High Yield ETFdb Portfolio].

Furthermore, individual debt securities must have a minimum outstanding face value of $500 million or more, and eligible issuers must have aggregate outstanding debt of $1 billion or more to be included in the index. It’s also worth nothing that the underlying index does not have ratings restrictions on either the individual bonds or the country; however, all bonds included in the underlying portfolio must have at least one credit rating from either Moody’s, S&P, or Fitch [see Bond ETFs For Every Objective]. 

CEMB will face direct competition from the recently launched Emerging Markets Corporate Bond Fund (EMCB) from WisdomTree. EMCB offers comparable exposure and has accumulated nearly $60 million in assets under management since launching on March 8th, 2012, showcasing the sheer demand for exposure to this corner of the fixed income market. Similar to EMCB, the new iShares offering will also feature a 0.60% expense ratio. 

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Disclosure: No positions at time of writing.