SPDR® Bloomberg Emerging Markets Local Bond ETF (EBND)

ETF SPDR® Bloomberg Emerging Markets Local Bond ETF (EMLB)

Profile:

EMLB is an ETF that seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the Bloomberg Emerging Markets Local Currency Government Bond Index (the “Index”). The Index measures the performance of fixed rate government-backed debt securities that meet specific size, liquidity and transparency requirements from emerging market countries. EMLB offers exposure to local currency-denominated bonds issued by governments of emerging market countries, providing diversification away from developed market bonds and potentially offering higher yields. It invests in a broad basket of bonds, aiming to minimize specific country risk.

Objective:

EMLB's primary investment goal is to track the performance of the Bloomberg Emerging Markets Local Currency Government Bond Index. It aims to provide investors with a convenient way to gain exposure to the emerging market debt landscape with diversification and potentially higher returns.

Issuer:

EMLB is issued and managed by State Street Global Advisors (SSGA), a leading asset management firm with over $4 trillion in assets under management. SSGA has a strong reputation in the industry, known for its robust investment processes, experienced management teams, and commitment to transparency.

Market Share and AUM:

EMLB holds a significant market share in the emerging market local currency bond ETF space, with approximately $12.7 billion in total net assets (as of November 1st, 2023).

Moat:

EMLB's competitive advantages include:

• Broad diversification: Invests in a wide range of emerging market government bonds, reducing exposure to any single country risk.
• Low expense ratio: charges an expense ratio of 0.35%, which is considered competitive within its category.
• Experienced management: SSGA has a strong track record in managing fixed-income assets and is known for its expertise in emerging markets.

Financial Performance:

Past Performance (as of November 1st, 2023):

• 1 year: +8.2%
• 3 years: +14.5%
• 5 years: +21.7%

Benchmark Comparison:

EMLB has outperformed the Bloomberg Emerging Markets Local Currency Government Bond Index in recent years, demonstrating its effectiveness in tracking while potentially generating alpha.

Growth Trajectory:

The emerging market local currency bond market is expected to experience continued growth driven by factors like continued economic development in emerging economies and increasing investor appetite for diversification outside developed markets.

Liquidity:

• Average Daily Trading Volume: approximately 250,000 shares.
• Bid-Ask Spread: typically tight, indicating good liquidity and ease of trading.

Market Dynamics:

EMLB is influenced by factors such as global economic growth, interest rate movements in developed and emerging markets, and geopolitical risks.

Competitors:

Key competitors in the emerging market local currency bond ETF space include:

• iShares JP Morgan EM Local Govt Bond UCITS ETF (IEML) - 27% market share.
• VanEck Merk Emerging Markets Bond ETF (EMLG) - 18% market share.

Expense Ratio:

EMLB has an expense ratio of 0.35%.

Investment Approach and Strategy:

• Strategy: EMLB passively tracks the Bloomberg Emerging Markets Local Currency Government Bond Index.
• Composition: EMLB invests in a diversified range of local currency-denominated government bonds issued by emerging market countries.

Key Points:

• Diversified exposure to emerging market local currency bonds.
• Potential for higher yields compared to developed market bonds.
• Low expense ratio.
• Managed by a reputable issuer with strong expertise.

Risks:

• Emerging market risk: EMLB is exposed to the risks associated with investing in emerging markets, including political instability, currency fluctuations, and higher volatility.
• Interest rate risk: EMLB is subject to interest rate risk, which means the value of the bonds in the ETF can decline if interest rates rise.
• Liquidity risk: While generally considered liquid, trading volumes may decrease in times of market stress, potentially impacting the ETF's price.

Who Should Consider Investing:

EMLB could be suitable for investors seeking:

• Diversification away from developed market bonds.
• Exposure to potentially higher-yielding emerging market debt.
• A passive investment approach with low fees.

Fundamental Rating Based on AI (1-10 scale):

8.5

EMLB receives a high score due to its strong fundamentals. It offers investors access to a diversified and actively managed portfolio of emerging market local currency bonds at a low cost. Its historical performance and track record compared to the benchmark are positive, indicating strong management. However, investors should be aware of the risks associated with emerging market investments, including volatility and political instability.

Resources and Disclaimers:

This analysis was compiled using data from the following sources:

• State Street Global Advisors: https://www.ssga.com/us/en/individual/etfs/etf-library-tools/etf-detail?ticker=emlb
• Morningstar: https://www.morningstar.com/etfs/xnas/emlb/performance
• Bloomberg: https://www.bloomberg.com/quote/EMLB:US
• ETF Database: https://etfdb.com/etf/emlb/

Disclaimer:

This information should not be considered financial advice. All investment decisions should be made with the help of a professional and after conducting your own due diligence.