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EM Bond Creditworthiness Has Improved

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EM Bond Creditworthiness Has Improved. Over much of the past two decades, many emerging markets (EM) countries have benefited from a number of factors that have generally led to improved credit ratings.

EM Bond Creditworthiness Has Improved. Over much of the past two decades, many emerging markets (EM) countries have benefited from a number of factors that have generally led to improved credit ratings. Until a few years ago, strong growth in China and rising commodity prices helped drive economic growth among many raw materials exporters. Central bank monetary stimulus in many developed countries led to capital flows into EM countries, helping to finance growth and keep borrowing costs low. Perhaps most important in explaining this long-term trend of improving creditworthiness are the structural reforms which many countries implemented after the financial crises of the 1980s and 1990s. Adoption of floating exchange rates and an increased ability to issue debt in local currencies has helped reduce the impact of external shocks on many EM economies.

But Has the Improvement Trend Stalled?

Since 2013, the long-term improvement in EM credit ratings appears to have stalled. This change is illustrated by the evolution in the credit rating composition of the J.P. Morgan EMBI Global Diversified Index,1 which tracks the U.S. dollar denominated EM sovereign and quasi-sovereign bond market. The investment-grade-rated portion of the Index reached a peak of 66% in 2013, versus 45% ten years prior and only 14% in 1997. However, this figure has been declining since 2013, with the high yield portion of the Index reaching 46% at the end of April.2

Investment Grade and High Yield Rating Breakdown of the J.P. Morgan EMBI Global Diversified Index 1997 to April 2016

VanEck

(click to enlarge) Source: J.P. Morgan. Past performance is no guarantee of future results and may be lower or higher than current performance.

A spate of downgrades in recent years has included some notable losses of investment grade status by certain countries. For example, Brazil experienced downgrades as a result of economic contraction, deteriorating fiscal health, and political gridlock. Russia’s high dependence on oil and gas to help finance economic growth and government expenditures, and the impact of Western imposed sanctions, resulted in downgrades beginning in 2014. South Africa now finds itself facing the possibility of losing its investment grade status as it struggles with low growth and high public debt levels.

Positive Credit Stories Can Still be Found

The story, however, is not all doom and gloom. A number of EM countries have seen an improvement in their credit ratings in recent years. For example, effective economic reforms in Peru and the Philippines have had a positive impact on the fiscal health of these countries, which led to rating upgrades. Hungary’s credit rating has benefitted from economic growth and the government’s commitment to managing debt levels and spending, which may help it to regain investment grade status. In Indonesia, policy effectiveness and a relatively healthy balance sheet have led to expectations of a possible upgrade this year, which may result in an investment grade rating from all three major rating agencies.

Diversify within EM Bonds

The diverging credit ratings among EM countries, and the fundamental drivers of these changes, serve as a reminder of the importance of diversification within an allocation to EM bonds. By diversifying across countries, sectors, currencies, and credit quality, investors can gain exposure to the full spectrum of EM debt. For example, the local currency debt universe is skewed toward higher rated issuers because countries with larger local bond markets also generally have greater economic stability and borrower rights. Therefore, this market can help investors reduce credit risk relative to the broad hard currency EM sovereign bond market while taking on exposure to local currencies.

Potential for Higher Yields and Increased Diversification

Over the long term, an allocation to EM bonds can potentially provide both yield enhancement and diversification benefits within a broader portfolio. EM bond yields have risen since early 2013, reflecting the market’s assessment of creditworthiness, and may offer a yield premium versus developed bond market yields. Low correlation3 with other asset classes, including core fixed income sectors, may improve a portfolio’s diversification.

Investors can access bonds issued by emerging market governments and denominated in local currencies with the VanEck Vectors™ J.P. Morgan EM Local Currency Bond ETF ( EMLC). Investors seeking to invest beyond sovereigns can gain access to high yield bonds issued by EM corporate issuers through the VanEck Vectors Emerging Markets High Yield Bond ETF ( HYEM). Alternatively, investors seeking diversified exposure to the broad EM debt universe across both sectors and currencies can do so through the VanEck Vectors Emerging Markets Aggregate Bond ETF ( EMAG).

Authored by William Sokol, Product Manager, ETFs

ETFs is authored by VanEck thought leaders. VanEck is the sponsor of VanEck Vectors ETFs and is currently among the largest providers of exchange traded funds (ETFs) in the U.S. and worldwide. VanEck Vectors ETFs empower investors to help build better portfolios with access to compelling investment themes and strategies. Our ETFs span many global asset classes, and are built to be transparent, liquid, and pure-play reflections of target markets.

IMPORTANT DISCLOSURE

1 J.P. Morgan EMBI Global Diversified Index is comprised of U.S. dollar denominated Brady bonds, Eurobonds, and traded loans issued by emerging markets sovereign and quasi-sovereign entities. The index weighting methodology limits the weight of countries with larger debt stocks.

2 Source: J.P. Morgan. Securities are categorized as Investment Grade if two out of three ratings from Moody’s, S&P and Fitch are Baa3/BBB-/BBB- or higher. If a security has two ratings, both must be Baa3/BBB-/BBB- or higher. Otherwise, securities are categorized as High Yield.

3 Correlation measures how two securities move in relation to each other.

This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.

The indices listed are unmanaged indices and do not reflect the payment of transaction costs, advisory fees, or expenses that are associated with an investment in any underlying exchange-traded funds. Historical performance is not indicative of future results; current data may differ from data quoted. Indexes are unmanaged and are not securities in which an investment can be made.

Diversification does not assure a profit nor protect against loss. Indices are not securities in which investments can be made.

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Bitcoin now the world’s seventh-largest asset, SEC commissioner offers support for crypto, and Coinbase CEO to meet with Trump

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Last week, the Nasdaq Crypto Index™ (NCI™) climbed 9.4%, continuing its strong upward trend. Bitcoin (BTC) rose 8.0%, maintaining its momentum as it approaches $100,000, while Ethereum (ETH) gained 8.7%, building on its post-election strength. Solana (SOL) also saw positive movement, up 6.3%, showcasing resilience amidst broader market dynamics. Since the US elections, the NCI has risen significantly, reflecting growing optimism in the crypto space, particularly with regards to assets beyond BTC and ETH. This continued upward trajectory highlights the outperformance of crypto assets against traditional markets, driven by increasing investor confidence and expectations of more favorable regulatory clarity in the near future.

Last week, the Nasdaq Crypto Index™ (NCI™) climbed 9.4%, continuing its strong upward trend. Bitcoin (BTC) rose 8.0%, maintaining its momentum as it approaches $100,000, while Ethereum (ETH) gained 8.7%, building on its post-election strength. Solana (SOL) also saw positive movement, up 6.3%, showcasing resilience amidst broader market dynamics. Since the US elections, the NCI has risen significantly, reflecting growing optimism in the crypto space, particularly with regards to assets beyond BTC and ETH. This continued upward trajectory highlights the outperformance of crypto assets against traditional markets, driven by increasing investor confidence and expectations of more favorable regulatory clarity in the near future.

Bitcoin topples Saudi Aramco to become world’s seventh-largest asset

Bitcoin reached an historic milestone, surpassing Saudi Aramco to become the world’s seventh-largest asset by market capitalization, valued at $1.82 trillion, just days after overtaking silver. This achievement places BTC behind only Alphabet, Amazon, Microsoft, Apple, NVIDIA, and gold. This milestone symbolizes BTC’s remarkable evolution as it approaches 16 years since its creation, solidifying its position as one of the world’s most valuable and influential assets.

SEC ccommissioner pledges crypto-forward approach after Gensler resignation

SEC Commissioner Mark Uyeda, a potential candidate to lead the agency following Gary Gensler’s resignation, has pledged to prioritize regulatory clarity for crypto assets if selected and criticized Gensler’s “anti-crypto” stance, proposing the creation of regulatory sandboxes to foster innovation in the US. This potential appointment could mark a turning point for the crypto industry, bringing clearer regulations, encouraging innovation, and creating a more favorable environment for market growth in the US.

Coinbase CEO plans to discuss personnel appointments with president-elect Trump

Brian Armstrong, CEO of Coinbase, plans to meet with Donald Trump, to discuss potential appointments in the new administration, including the plan to create a ”Presidential Bitcoin and Crypto Council” for clear regulatory guidance. After facing actions from the SEC, Armstrong has taken a more active political stance, supporting pro-crypto candidates and contributing millions of dollars to the Fairshake PAC, an alliance to support political candidates committed to securing the US as the home to innovators building the next generation of the internet. This meeting highlights the growing interaction between the crypto industry and the political landscape and signals a potential regulatory shift in the US favorable to the crypto market, bringing greater political influence and growth opportunities for the sector.


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CBEU ETF, en eurohedgad satsning på cybersäkerhet

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First Trust Nasdaq Cybersecurity UCITS ETF EUR Hedged Acc (CBEU ETF), med ISIN IE000P16KP52, försöker spåra Nasdaq CTA Cybersecurity (EUR Hedged)-index. Nasdaq CTA Cybersecurity (EUR Hedged)-index spårar företag som är aktivt involverade i att tillhandahålla cybersäkerhetsteknik och -tjänster. Valutasäkrad till euro (EUR).

First Trust Nasdaq Cybersecurity UCITS ETF EUR Hedged Acc (CBEU ETF), med ISIN IE000P16KP52, försöker spåra Nasdaq CTA Cybersecurity (EUR Hedged)-index. Nasdaq CTA Cybersecurity (EUR Hedged)-index spårar företag som är aktivt involverade i att tillhandahålla cybersäkerhetsteknik och -tjänster. Valutasäkrad till euro (EUR).

Den börshandlade fondens TER (total cost ratio) uppgår till 0,60 % p.a. First Trust Nasdaq Cybersecurity UCITS ETF EUR Hedged Acc är den enda ETF som följer Nasdaq CTA Cybersecurity (EUR Hedged) index. ETFen replikerar det underliggande indexets prestanda genom full replikering (köper alla indexbeståndsdelar). Utdelningarna i ETFen ackumuleras och återinvesteras.

First Trust Nasdaq Cybersecurity UCITS ETF EUR Hedged Acc är en liten ETF med tillgångar på 44 miljoner GBP under förvaltning. Denna ETF lanserades den 18 juli 2023 och har sin hemvist i Irland.

Investeringsmål/strategi

First Trust Nasdaq Cybersecurity ETF är en börshandlad fond. Fonden eftersträvar investeringsresultat som generellt motsvarar priset och avkastningen (före fondens avgifter och utgifter) för ett aktieindex som kallas Nasdaq CTA Cybersecurity Index™.

Det finns ingen garanti för att fondens investeringsmål kommer att uppnås.

Index Beskrivning Enligt Indexleverantören

Nasdaq CTA Cybersecurity™ Index är utformat för att spåra resultatet för företag som är engagerade i cybersäkerhetssegmentet inom teknik- och industrisektorerna. Det inkluderar företag som primärt är involverade i att bygga, implementera och hantera säkerhetsprotokoll som tillämpas på privata och offentliga nätverk, datorer och mobila enheter för att skydda data- och nätverksdriftens integritet.

För att ingå i indexet måste ett värdepapper vara noterat på en indexberättigad global börs och klassificeras som ett cybersäkerhetsföretag enligt bestämt av Consumer Technology Association (CTA).

Varje värdepapper måste ha ett världsomspännande börsvärde på 500 miljoner USD, ha en minsta tremånaders genomsnittlig daglig handelsvolym i dollar på 1 miljon USD och ha ett minimum fritt flytande på 20 %.

Indexet utvärderas halvårsvis i mars och september, men om ett indexpapper vid någon annan tidpunkt under året än utvärderingen inte längre uppfyller behörighetskriterierna, eller på annat sätt bedöms ha blivit olämpligt att ingå i indexet, säkerhet tas bort från indexet och ersätts inte. Varje indexpapper som når sin utländska investeringsgräns mellan kvartalsvisa ombalanseringar tas bort från indexet.

Indexet använder en viktningsmetod baserad på fritt flytande marknadsvärde, som inkluderar tak för procentandelen av varje enskilt värdepapper för att härleda de slutliga vikterna för värdepapperen. Inget värdepapper får vägas mindre än 0,25 %.

Indexet ombalanseras kvartalsvis.

Handla CBEU ETF

First Trust Nasdaq Cybersecurity UCITS ETF EUR Hedged Acc (CBEU ETF) är en börshandlad fond (ETF) som handlas på Euronext Amsterdam.

Euronext Amsterdam är en marknad som få svenska banker och nätmäklare erbjuder access till, men DEGIRO gör det.

Börsnoteringar

BörsValutaKortnamn
Euronext AmsterdamEURCBEU

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VärdepapperKortnamnSektorVikt %
Broadcom Inc.AVGOSemiconductors & Semiconductor Equipment6.72%
CrowdStrike Holdings, Inc. (Class A)CRWDSoftware6.68%
Palo Alto Networks, Inc.PANWSoftware6.41%
Cisco Systems, Inc.CSCOCommunications Equipment6.23%
Infosys Limited (ADR)INFYIT Services5.37%
Darktrace PlcDARK.LNSoftware5.25%
Thales S.A.HO.FPAerospace & Defense3.83%
Gen Digital Inc.GENSoftware3.64%
Leidos Holdings, Inc.LDOSProfessional Services3.64%
Booz Allen Hamilton Holding CorporationBAHProfessional Services3.23%
Science Applications International CorporationSAICProfessional Services3.06%
Trend Micro Incorporated4704.JPSoftware3.02%
Okta, Inc.OKTAIT Services3.00%
Check Point Software Technologies Ltd.CHKPSoftware2.95%
CyberArk Software Ltd.CYBRSoftware2.92%
F5 Inc.FFIVCommunications Equipment2.91%
Tenable Holdings, Inc.TENBSoftware2.86%
Fortinet, Inc.FTNTSoftware2.78%
Akamai Technologies, Inc.AKAMIT Services2.69%
Qualys, Inc.QLYSSoftware2.68%
Varonis Systems, Inc.VRNSSoftware2.66%
Open Text CorporationOTEX.CNSoftware2.48%
SentinelOne, Inc. (Class A)SSoftware2.43%
Cloudflare, Inc. (Class A)NETIT Services2.39%
Zscaler, Inc.ZSSoftware2.31%
Rapid7, Inc.RPDSoftware2.04%
BlackBerry Ltd.BBSoftware1.82%
NetScout Systems, Inc.NTCTCommunications Equipment1.58%
A10 Networks, Inc.ATENSoftware1.26%
Radware Ltd.RDWRSoftware0.89%
US Dollar$USDOther0.29%
Japanese Yen$JPYOther0.00%

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LYTR ETF en likaviktad råvarufond som väljer bort jordbruksprodukter

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Amundi Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF Acc (LYTR ETF) med ISIN LU1829218749, försöker följa Bloomberg Energy and Metals Equal-Weighted-index. Bloomberg Energy and Metals Equal-Weighted-index följer utvecklingen av råvaror inom energi-, ädelmetall- och industrimetallsektorerna. Alla råvaror som är representerade i indexet är likaviktade.

Amundi Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF Acc (LYTR ETF) med ISIN LU1829218749, försöker följa Bloomberg Energy and Metals Equal-Weighted-index. Bloomberg Energy and Metals Equal-Weighted-index följer utvecklingen av råvaror inom energi-, ädelmetall- och industrimetallsektorerna. Alla råvaror som är representerade i indexet är likaviktade.

Den börshandlade fondens TER (total cost ratio) uppgår till 0,30 % p.a. Amundi Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF Acc är den enda ETF som följer Bloomberg Energy and Metals Equal-Weighted-index. ETFen replikerar resultatet för det underliggande indexet syntetiskt med en swap.

Amundi Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF Acc är en mycket stor ETF med tillgångar på 1 173 miljoner euro under förvaltning. ETF lanserades den 26 januari 2006 och har sin hemvist i Luxemburg.

Investeringsmål

Amundi Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF Acc (”delfonden”) är en UCITS-kompatibel börshandlad fond som syftar till att spåra både den uppåtgående och nedåtgående utvecklingen av Bloomberg Energy & Metals Equal-Weighted Total Return Index ( ”Indexet”) uttryckt i US-dollar och omräknat i euro, representativt för råvarumarknaden och mer specifikt av energi-, basmetall- och ädelmetallmarknaderna, samtidigt som volatiliteten i skillnaden mellan delfondens avkastning och indexets avkastning (”spårningsfelet”) minimeras.

Handla LYTR ETF

Amundi Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF Acc (LYTR ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
gettexEURLYTR
Stuttgart Stock ExchangeEURLYTR
Borsa ItalianaEURCOMO
Euronext ParisEURCOMO
London Stock ExchangeGBXCOMG
London Stock ExchangeUSDCOMU
SIX Swiss ExchangeCHFCOMO
SIX Swiss ExchangeUSDCOMO
XETRAEURLYTR

Största innehav

Denna fond använder syntetisk replikering för att spåra indexets prestanda.

NamnValutaVikt %Sektor
NATURAL GAS 01/25 NYMEUSD9.94 %Energi
LOW SULPHUR GASOIL 01/25 ICE-FUTUSD9.33 %Energi
LME PRI ALUM FUTR Jan25USD9.22 %Basmetall
BRENT CRUDE 02/25 ICE-FUTUSD9.21 %Energi
NICKEL 01/25 LMEUSD9.20 %Basmetall
CRUDE OIL 01/25 NYMEUSD9.20 %Energi
ZINC 01/25 LMEUSD8.89 %Basmetall
GOLD 100 OZ 02/25 CECUSD8.75 %Ädelmetall
LME COPPER FUTURE Jan25USD8.72 %Basmetall
SILVER 03/25 CECUSD8.71 %Ädelmetall

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