VanEck Vectors Emerging Markets Aggregate Bond ETF (EMAG)

Overview

The investment described seeks to closely replicate the price and yield performance of the MVIS® EM Aggregate Bond Index before fees and expenses. The emphasis is on investing a minimum of 80% of its assets in securities that form part of the benchmark index, ensuring a focused investment strategy that aligns with the index's performance. The index itself is a collection of emerging market sovereign and corporate bonds, inclusive of those denominated in U.S. dollars, Euros, or local currencies of emerging markets. It features both investment-grade and below investment-grade rated securities, indicating a diverse risk profile. The fund operates on a non-diversified basis, which means it may invest more heavily in fewer securities, potentially increasing its risk and return prospects.

Products and Services

• Emerging Market Sovereign Bonds

These are bonds issued by governments of emerging economies. They can be denominated in various currencies, including U.S. dollars, Euros, or local currencies, offering exposure to different types of risk and reward profiles. Investing in these bonds can provide investors with the potential for higher yields compared to developed market bonds, although they also come with increased risks such as currency risk and political risk.

• Emerging Market Corporate Bonds

Corporate bonds issued by companies in emerging markets are another essential component. Like sovereign bonds, these can also be denominated in U.S. dollars, Euros, or local currencies. They offer an opportunity to gain exposure to the growing corporate sector of emerging economies, which may offer higher yields than similar credit instruments in developed markets due to the higher risk associated with these regions.

• Investment Grade and Below Investment Grade Securities

The fund invests in a mix of investment-grade and below investment-grade rated securities, allowing it to balance risk and return by diversifying across different credit qualities. Investment grade securities are considered to have a lower risk of default and thus generally offer lower yields, while below investment grade securities, also known as high-yield bonds, are riskier but can offer higher returns.