NEW YORK--(BUSINESS WIRE)--
The start of 2014 has been a rough one for emerging market (EM) debt,
with debt issued in local currencies bearing the brunt of the decline,
according to Fran
Rodilosso, fixed income portfolio manager at Market Vectors ETFs.
“Year to date, the severity of the sell-off has varied by country and by
the type of issuance, with hard currency EM debt generally holding much
of its value so far this year, helped by the rally in Treasuries,” Mr.
Rodilosso said. “On the other hand, local currency denominated issues
appear to have been the victims of several forces: ‘risk-off’ related
outflows, adverse political events, and/or worsening near-term economic
fundamentals. Those countries with larger current account deficits have
been particularly hard hit.”
Mr. Rodilosso points to the performance of the Market Vectors EM
Aggregate Bond Index (MVEMAG), which underlies the Market
Vectors Emerging Markets Aggregate Bond ETF (NYSE Arca: EMAG),
during the first month of the year as a possible means of shedding some
light on what has happened so far in 2014. Hard currency sovereign debt
did poorly in 2013, with returns hurt by the fact that it was the
component of the EM debt universe with the longest duration. That same
characteristic supported hard currency sovereigns during January as
Treasuries rallied. Nonetheless, hard currency sovereign debt declined
about 1.6% for the month, weighed down by Argentina, Ukraine, and
“I believe the corporate debt market may potentially lead EM fixed
income this year, because there generally is a more diversified group of
borrowers in this market, many of which appear to be in a better
position than even their own governments to weather the current storms,”
Mr. Rodilosso noted. He added that the corporate hard currency debt
component of MVEMAG was slightly down 0.18 percent in January, while
local currency debt overall was down more than 4 percent in January as
every currency weakened versus the dollar, and most local interest rate
curves pushed higher.
Mr. Rodilosso has 20 years of experience trading and managing risk in
fixed income investment strategies, including 17 years covering emerging
markets. In addition to EMAG, among the Market Vectors ETFs under his
watch are Investment
Grade Floating Rate ETF (NYSE Arca: FLTR®), Emerging
Markets Local Currency Bond ETF (NYSE Arca: EMLC®),Emerging
Markets High Yield Bond ETF (NYSE Arca: HYEM®), International
High Yield Bond ETF (NYSE Arca: IHY®), Fallen
Angel High Yield Bond ETF (NYSE Arca: ANGL®), Treasury-Hedged
High Yield Bond ETF (NYSE Arca: THHY),
Bond ETF (NYSE Arca: CHLC®). As of December 31, 2013 the total
assets for these ETFs amounted to approximately $1.4 billion.
About Market Vectors ETFs
Market Vectors exchange-traded products have been offered since 2006 and
span many asset classes, including equities, fixed income (municipal and
international bonds) and currency markets. The Market Vectors family
totaled $22.1 billion in assets under management, making it the seventh
largest ETP family in the U.S. and 10th largest worldwide as of December
Market Vectors ETFs are sponsored by Van Eck Global. Founded in 1955,
Van Eck Global was among the first U.S. money managers helping investors
achieve greater diversification through global investing. Today, the
firm continues this tradition by offering innovative, actively managed
investment choices in hard assets, emerging markets, precious metals
including gold, and other alternative asset classes.
Index performance is not illustrative of fund performance. Fund
performance current to the most recent month end is available by
There are risks involved with investing in ETFs, including possible loss
of money. Shares are not actively managed and are subject to risks
similar to those of stocks, including those regarding short selling and
margin maintenance requirements. Ordinary brokerage commissions apply.
Debt securities carry interest rate and credit risk. Interest rate risk
refers to the risk that bond prices generally fall as interest rates
rise and vice versa. Credit risk is the risk of loss on an investment
due to the deterioration of an issuer's financial health. The Fund’s
underlying securities may be subject to call risk, which may result in
the Fund having to reinvest the proceeds at lower interest rates,
resulting in a decline in the Fund’s income.
Market Vectors EM Aggregate Bond Index (the “Index”) is the exclusive
property of Market Vectors Index Solutions GmbH (the “Index Provider”),
which has contracted with Solactive AG (the “Calculation Agent “) to
calculate the Index. The Calculation Agent is not an adviser for or a
fiduciary to any account, fund or ETF managed by Van Eck Associates
Corporation. The Calculation Agent is not responsible for any direct,
indirect, or consequential damages associated with indicative optimized
portfolio values and/or indicative intraday values. Market Vectors
Emerging Markets Aggregate Bond ETF (the “Fund”) is not sponsored,
endorsed, sold or promoted by the Index Provider, which makes no
representation regarding the advisability of investing in the Fund.
Principal International and Emerging Markets Risk Factors: Fixed
income securities are subject to credit risk and interest rate risk.
High yield bonds may be subject to greater risk of loss of income and
principal and are likely to be more sensitive to adverse economic
changes than higher rated securities. International investing involves
additional risks which include greater market volatility, the
availability of less reliable financial information, higher
transactional and custody costs, taxation by foreign governments,
decreased market liquidity, and political instability. Changes in
currency exchange rates may negatively impact the Fund’s return.
Investments in emerging markets securities are subject to elevated risks
which include, among others, expropriation, confiscatory taxation,
issues with repatriation of investment income, limitations of foreign
ownership, political instability, armed conflict, and social
instability. Investors should be willing to accept a high degree of
volatility and the potential of significant loss. Diversification does
not assure a profit nor protect against loss. Please see the Market
Vectors Emerging Markets Aggregate Bond ETF (the “Fund”) prospectus for
full disclosure information.
The “net asset value” (NAV) of an ETF is determined at the close of each
business day, and represents the dollar value of one share of the ETF;
it is calculated by taking the total assets of an ETF subtracting total
liabilities, and dividing by the total number of shares outstanding. The
NAV is not necessarily the same as an ETF's intraday trading value.
Investors should not expect to buy or sell shares at NAV. Total returns
are based upon closing “market price” (price) of the ETF on the dates
Fund shares are not individually redeemable and will be issued and
redeemed at their NAV only through certain authorized broker-dealers in
large, specified blocks of shares called “creation units” and otherwise
can be bought and sold only through exchange trading. Creation units are
issued and redeemed principally in kind. Shares may trade at a premium
or discount to their NAV in the secondary market.
Investing involves substantial risk and high volatility, including
possible loss of principal. Bonds and bond funds will decrease in value
as interest rates rise.An investor should consider the
investment objective, risks, charges and expenses of a Fund carefully
before investing. To obtain a prospectus and summary prospectus, which
contain this and other information, call 888.MKT.VCTR or visit marketvectorsetfs.com.
Please read the prospectus
prospectuscarefully before investing.
Not FDIC Insured — No Bank Guarantee — May Lose Value
Mike MacMillan/Chris Sullivan, 212-473-4442
Source: Market Vectors ETFs