Invesco's (NYSE:IVZ) PowerShares unit, the fourth-largest U.S. ETF issuer, is slated to introduce the PowerShares Fundamental Emerging Markets Local Debt Portfolio (NYSE: PFEM) on Thursday.
The PowerShares Fundamental Emerging Markets Local Debt Portfolio, which will charge an annual expense ratio of 0.5 percent, enters a corner of the ETF market fraught with competition.
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The new PowerShares ETF will tussle with popular emerging markets local currency bond funds such as the WisdomTree Emerging Markets Local Debt Fund (NYSE:ELD). ELD is the second-largest actively managed ETF with $2.05 billion in assets under management.
Other popular emerging markets bond funds with holdings denominated in local currencies include the $1.5 billion Market Vector Emerging Markets Local Currency Bond ETF (NYSE:EMLC) and the $645.3 million iShares Emerging Markets Local Currency Bond Fund (NYSE:LEMB).
The new PowerShares fund will track a Research Affiliates index, the Citi RAFI Bonds Sovereign Emerging Markets Extended Local Currency Index, which screens constituents on the following factors: GDP, population, land area and energy use, according to Index Universe.
PowerShares currently offers several ETFs based on fundamentally-weighted indexes provided by Research Affiliates, including the $1.82 billion PowerShares FTSE RAFI US 1000 Portfolio (NYSE:PRF) and the $381.6 milllion PowerShares FTSE RAFI Emerging Markets Portfolio (NYSE:PXH).
PowerShares already has a sizable footprint in the emerging markets bond ETF arena with the U.S. dollar-denominated PowerShares Emerging Markets Sovereign Debt Portfolio (NYSE:PCY). That ETF has $2.64 billion in assets.
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