The ETF "PowerShares Emerging Markets Sovereign Debt Portfolio" is based on the DB Emerging Market USD Liquid Balanced Index. The fund invests at least 90% of its assets in the index, which consists of sovereign bonds from more than twenty emerging countries. The latter are selected annually, while the index is weighted every quarter. PCY is part of my new strategy "Ex-US International ETFs and Dividend Stocks".
The fund's top ten holdings are:
| Top 10 Holdings | |
|---|---|
| Romania Medium Term Nts Reg S (—) | 6.01% |
| Islamic Rep Pakistan (—) | 3.15% |
| Vietnam Socialist Rep (—) | 3.07% |
| Korea Rep (—) | 3.06% |
| Korea Rep (—) | 3.06% |
| Colombia Rep (—) | 2.31% |
| El Salvador Rep (—) | 2.31% |
| Republic of Turkey (—) | 2.24% |
| Uruguay Rep (—) | 2.20% |
| Brazil Federative Rep (—) | 2.19% |
| % of Total Holdings | 29.60% |
The fund's credit quality is distributed as follows:
| S&P | Moody's |
| AA: 4% | Aa: 4% |
| A: 8% | A: 13% |
| BBB: 42% | Baa: 41% |
| BB: 34% | Ba: 25% |
| B: 11% | B: 17% |
The maturity of ETF bonds is divided into the following durations:
| 0 - 1 years | 0.00% |
| 1 - 5 | 10.12% |
| 5 - 10 | 35.42% |
| 10 - 15 | 9.04% |
| 15 - 20 | 7.33% |
| 20 - 25 | 18.96% |
| 25 and Over | 19.14% |
For the management of its ETF, Invesco has an expense ratio of 0.50%. The average return is generous, with 6.38%. PCY offers a little extra for annuitants: Distributions are paid to you monthly.
The fund's volatility in CHF, at 10.21%, is certainly a bit high for bonds, but remains quite affordable considering the yield that can be obtained. The security also offers protection against dollar fluctuations, with a $risk of -0.23.
PCY is therefore an interesting investment for hedge your portfolio against stock market risk and against currency risk. I plan to take a position there soon.
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Hello Jerome,
Are there management fees to pay on ETFs? If so, what are they?
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Hello Fabrice,
Fees are taken directly from the fund value. They amount to 0.50% for PCY.
The “closed-end fund” variant (instead of an ETF), with EDD (Morgan Stanley Emerging Markets Domestic Debt), is also possible.
Thanks for your comment birdienumnum
I just took a look at Bloomberg's PCY: I find 5.11 of Div Yield…, not 6.38…. Did I make a mistake somewhere?
Hello. I just want to remind you that I give the average return on all my securities. This avoids errors on securities that have just been destroyed by the market, most of the time for excellent reasons, or on those whose price has just climbed, also very often for good reasons. This is less important on a bond ETF, but I keep the same principle for all my investments. Best regards.