Van Eck Global, the parent company of ETF issuer Market Vectors, said in a statement issued today that is has lowered the expense ratio on the Market Vectors Emerging Markets Local Currency Bond ETF (NYSE:EMLC) to 0.47 percent per year from 0.49 percent. The change went into effect September 1 and is capped through September 1, 2013.
The Market Vectors Emerging Markets Local Currency Bond ETF, which debuted in July 2010, was the first U.S.-listed ETF to focus on non-dolllar denominated emerging markets sovereign debt. EMLC competes with the actively managed WisdomTree Emerging Markets Local Debt Fund (NYSE:ELD) and the iShares Emerging Markets Local Currency Bond Fund (NYSE:LEMB).
ELD is the second-largest actively managed ETF with $1.2 billion in assets under management while LEMB has $61.8 million in AUM. EMLC had $792.3 million in AUM as of September 12. ELD charges 0.55 percent annually while LEMB charges 0.6 percent.
EMLC also features lower fees than the two largest dollar-denominated emerging markets bond ETFs, the iShares J.P. Morgan USD Emerging Markets Bond Fund (NYSE:EMB) and the PowerShares Emerging Markets Sovereign Debt Portfolio (NYSE:PCY). Those funds charge 0.6 and 0.5 percent, respectively.
"The development of EM debt markets over the past several years has been impressive," said Ed Lopez, marketing director for Market Vectors ETFs, in the statement. "Low default rates among corporate issuers, investment grade credit ratings among most sovereign issuers in EMLC's index and generally higher yields currently than comparable developed world issuers make a compelling case for investing in emerging markets bonds."
EMLC has a 30-day SEC yield of 5.09 percent and a trailing 12-month yield of 4.49 percent. Issues from Brazil, Poland, South Africa and Mexico combine for 40 percent of the fund's weight. The ETF pays a monthly dividend and has gained 7.6 percent year-to-date.
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