J.P. Morgan Asset Management on Tuesday rolled out the JPMorgan USD Emerging Markets Sovereign Bond ETF (JPMB), which provides exposure to U.S. dollar-denominated sovereign debt, quasi-sovereign debt and floating rate debt securities in emerging markets.
According to the fund’s prospectus, quasi-sovereign debt securities are issued by an entity that is 100 percent guaranteed or 100 percent owned by a national government.
The fund’s underlying index employs a rules-based, three-step process that filters for liquidity and country risk while allocating risk based on credit rating. The index rebalances monthly within each country and semi-annually across countries. And it uses optimization techniques to minimize tracking error to the underlying index.
That index, the JPMorgan Emerging Markets Risk-Aware Bond Index, was created by JPMAM’s quantitative beta strategies team. The company posits that using an alternative weighting approach could provide better risk-adjusted returns versus market cap-weighted indexes and potentially generate a competitive yield and lower levels of duration for clients.
The JPMB fund holds 140 securities, and its net expense ratio is 0.39 percent.