ProShares Eyes EM Bond ETF

ETF Trends

ProShares, the largest issuer of inverse and leveraged ETFs, has filed plans with the Securities and Exchange Commission to possibly introduce a short-term emerging markets bond ETF that would add to the firm’s growing lineup of non-leveraged products.

The ProShares Short Term USD Emerging Markets Bond ETF will invest dollar-denominated sovereign, sub-sovereign and corporate issues, according to the SEC filing. Only bonds with less than five years remaining to maturity will be included in the index.

The Index is designed to represent the more liquid universe of Short Term USD EM Bonds. The bonds eligible for inclusion in the Index are expected to include those issued by Emerging Market Sovereigns, Sub-Sovereigns and Corporates that: (1) are fixed rate; (2)have at least eighteen months until maturity and (3)are no more than five years from maturity. Eligible bonds will also be screened for liquidity based on characteristics such as minimum of face amount outstanding. Callable, putable, zero coupon, inflation-linked and convertible bonds, among others, will be excluded. The Index includes both investment grade and below investment grade rated (i.e. “high yield”) securities,” according to the filing.

The filing also indicated the index will include both investment-grade and junk bonds. High-yield bonds, including emerging markets issues, typically have lower durations than long-dated U.S. Treasuries. That has helped some emerging markets bond ETFs perform less poorly than U.S. government bond funds as 10-year Treasury yields have soared since tapering talk began in May. [EM Junk Bond ETF Crushes Treasuries]

The ProShares filing did not include a ticker or expense ratio for the new ETF, indicating a launch date is not imminent.

Popular ProShares ETFs include the ProShares UltraShort Financials (SKF) and the ProShares UltraShort 20+ Year Treasury (TBT) . However, the firm has been expanding its non-leveraged offerings with funds such as the ProShares High Yield—Interest Rate Hedged (HYHG) and the ProShares Hedge Replication ETF (NYSEArca: HDG ).

ProShares Hedge Replication ETF

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HDG

 

ETF Trends editorial team contributed to this post.

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