DWS : Government bonds have established themselves as an important investment instrument with which investors can participate in opportunities in emerging markets.
By ETFWorld.co.uk
Michael Mohr, Head of Passive Products at DWS
- New ETF invests in local currency government bonds from currently 16 emerging market countries in Asia, South America and Eastern Europe
- The construction of the underlying index avoids the concentration on a few issuers
- Xtrackers thus expands emerging market bond offering with an important, cost-efficient component
Government bonds have established themselves as an important investment instrument with which investors can participate in opportunities in emerging markets. Government bond indices tend to have lower volatility and interim setbacks than equity indices and can therefore play an important role in a diversified portfolio. With the Xtrackers II J.P. Morgan EM Local Government Bond UCITS ETF, Xtrackers has added a product to its range that invests in emerging market bonds denominated in local currency. The ETF is listed on Deutsche Börse and the London Stock Exchange, with other exchanges to follow.
The new ETF tracks the index “J.P. Morgan Government Bond Index-Emerging Markets Global Div 10% Cap 0.25% Floor”. The index comprises fixed-interest government bonds issued by the governments of currently 16 emerging markets and quoted in local currency. The country weighting is based on the total volume of bonds issued by the respective country, as well as other factors.
In the index, the maximum weighting is limited to 10 percent, and at each monthly rebalancing, a country must meet the weighting criterion of at least 0.25 percent. In this way, less liquid, small bond markets and an excessive concentration on large bond issuers are avoided, thus the index offers investors a broad diversification. All bonds with remaining maturities of more than six months are included in the index. The ETF physically tracks the underlying index.
“The importance of emerging market bonds in local currency is increasing significantly in portfolios in view of the persistently high inflation. At the same time, the largest emerging markets are playing an increasingly important role in the composition of a global bond portfolio. Against this background, Xtrackers has an efficiently constructed product to offer at attractive conditions,” says Michael Mohr, Global Head of Xtrackers Products at DWS.
Product Table
| Name | Xtrackers II J.P. Morgan EM Local Government Bond UCITS ETF 1D |
| Asset class | Bond ETF |
| ISIN | LU2158769930 |
| T.E.R. | 0.25 per cent |
| Dividends | distributing |
| Reference index | JP Morgan Government Bond Index-Emerging Markets Global Div 10% Cap 0.25% Floor (GBIECPUD) |
Source: ETFWorld.co.uk
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