It’s been a long time coming, but it’s finally arrived.
Investors can now buy the betas for all the major asset classes. The latest arrival is PowerShares Emerging Markets Sovereign Debt ETF (Amex: PCY), which was launched last week. As a result, all ten of the major capital and commodity asset classes are now available for the first time in index-tracking exchange-listed securities (see our nearby ETF list in the left-hand column under Standard Betas).
PCY is notable for the fact that it’s the first time that emerging markets debt has been indexed for the U.S. investing public. But as with any new index fund, the first question is always: What’s the underlying benchmark?
PCY tracks DB Emerging Markets USD Liquid Balanced Index. In deference to the regulatory and trading demands for ETFs, the benchmark sacrifices scope in exchange for a relatively selective approach that focuses on “the most liquid” dollar-denominated emerging markets debt. A similarly narrow approach is used for profiling the respective asset classes targeted by SPDR Lehman International Treasury Bond ETF (Amex: BWX) and iShares iBoxx $ High Yield Bond ETF (Amex: HYG).