JP Morgan launched a new fund, JPMorgan USD Emerging Markets Sovereign Bond ETF (JPMB – Free Report) , on Jan 30, 2018, focused on providing long exposure to emerging market bonds.

Emerging market USD denominated bond funds offer great diversification benefit, as it is well spread out between multiple emerging market nations. It provides higher yields than what investors can expect to earn domestically, while keeping the portfolio safe from currency fluctuations.

Fund Characteristics

The fund seeks to provide exposure to USD denominated sovereign debt across emerging markets. The fund seeks investment results that closely correspond to the performance of the JPMorgan Emerging Markets Risk-Aware Bond Index, before fees and expenses.

The fund has amassed $48.7 million within a few days of trading and charges a fee of 49 basis points a year. It has 140 holdings in its portfolio and has top exposure to government bonds, corporate bonds and agency bonds, with 81%, 14% and 4% exposure, respectively.

How Does it Fit in a Portfolio?

This ETF is a good play for investors looking for some high risk exposure to emerging markets, while mitigating some risk that comes with emerging market equity investments. It has the potential to serve as a diversifying investment for investors, as it exposes investors to international fixed income markets, while mitigating currency risk.

“Fixed income ETFs continue to be amongst the fastest growing areas of the ETF industry, a momentum which we expect to continue as these products mature and evolve. Fixed income ETFs offer lower-cost, convenience, transparency and intra-day access and can be used to help build more robust portfolios and solve for a variety of investment needs,” concluded Bryon Lake, international head of ETFs for J.P. Morgan Asset Management.

As a result, we believe this ETF has good potential to diversify investors’ portfolio of across asset classes and geographies.

Competition