Public Em Debt Monitor 2016 3

8/19/2019 Public Em Debt Monitor 2016 3

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By the end of February, global financial markets gathered a good deal of positive momentum. The ememarkets (“EM”) debt universe, local- and hard-currency, reflected the risk-on tone that took hold mid-monthresult of bouncing commodity prices, hopes for a more dovish Federal Open Market Committee, astabilization of China’s markets. There has been no strong indication that any of these forces will become a The question that faced investors at the beginning of March was: is the recovery in EM assets sustainable?

In February news was mixed, and ratings agencies remained in downgrade mode throughout EM. Amonmore notable ratings moves, Moody’s downgraded Brazil by two notches to Ba2 from Baa3, finally placincountry’s dollar debt below investment grade at all three major agencies. Moody’s also took Petrobras BraS.A. down three notches to B3, the action did little to stem a sharp recovery in Petrobras’ outstanding bonthe beginning of March, Moody’s placed a negative outlook on China’s Aa3 government bond rating.generally accepted that ratings actions lag news and market movements, but the significance of the ramigration of many EM credits over the last year is the impact it has on the holder base of these credits, e.the suitability of fallen angel issuers for investment grade funds. Transitions among holders have created buying opportunities in Russian and Brazilian credits over the past twelve months in our view.

China took steps to further improve liquidity and credit conditions near month-end by cutting the required reratios of banks and by further opening the local bond market to foreign investors. The latter move is likely tolittle impact in the short to medium term, as the majority of non-sovereign wealth fund investors are being k

bay by the prospects of further China yuan renminbi (“CNY”) weakness.

Total Return (%)

Market Review – Fran Rodilosso, Portfolio Manager

(continued on next page)

Correlation: 5-Year*

Market Snapshot

Risk/Return: 5-Year*

EM Bond Fund Flows

Source: Morningstar, U.S. funds as of 2/29/16

Source: FactSet as of 2/29/16

Source: FactSet, monthly as of 2/29/16

Source: FactSet, annualized as of 2/29/16

Yield to Maturity (%)*

† Annualized. All performance quoted represents past performance. Past performance is no guarantefuture results. Not representative of fund or fund indexes. Indexes are unmanaged and are not securitiewhich an investment can be made. Please see definitions on last page.

*EM Local Sovereigns: JPMorgan GBI-EM Global Diversified Index (GBI-EM) tracks local currency denomEM government debt. EM USD & EUR Sovereigns: BofA Merrill Lynch Emerging Markets External SovereigIndex (EMGB) tracks US dollar and Euro denominated EM government debt. EM USD Corporates: BofA MLynch US Emerging Markets Liquid Corporate Plus Index (EMCL) tracks the US dollar denominated non-government debt of EM. U.S. Corporates: The BofA Merrill Lynch US Corporate and High Yield Index (IUC0tracks the US dollar denominated investment grade and below investment grade corporate debt issued in thedomestic market. U.S. IG Bonds: Barclays US Aggregate Index (US AGG) tracks fixed-rate, publicly placeddollar denominated and non-convertible debt issued in the US domestic market.

Emerging Markets Debt Monitor March 2

Source: FactSet as of 2/

Source: FactSet as of 2/

2011 2012 2013 2014 20153

4

5

6

7

8

EMLo cal

Sovs

EMUSD Corps

EM USD &

EUR Sovs

03/2011 to 02/2016

0 2 4 6 8 10

Standard Deviation (%)

0

2

4

6

8

10

T o t a l R e t u r n ( % )

EM USD &

EUR Sovs

EM USD

Corps

US CorpsUS Agg

03/2011 to 02/2016

Category

Estimated Net Flow ($M)

1-Mo 3-Mo YTD 1-Yr

Local Currency

ETFs -53 -288 -95 -74

Mutual Funds -510 -1,769 -4,562 -5,304Hard Currency

ETFs 339 -685 -268 338

Mutual Funds -1,040 -2,822 -7,820 -7,453

Agg Corps Sovs Sovs Corps

US IG

Bonds

US

HY/IG

EM

Local

EM USD

& EUR

EM

USDUS AGG 1.00

UC0 0.72 1.00

GBI-EM 0.26 0.62 1.00

EMGB 0.36 0.71 0.89 1.00

EMCL 0.31 0.78 0.83 0.90 1.00

Sovereign Indices Corporate Indices

Characteristic EM Local* EM USD & EUR* EM USD* DevelopedNumber of Securities 192 452 1,315 9,237

Number of Issuers 17 76 604 2,101

Market Value ($B) 611 651 996 6,707

Years to Maturity (avg.) 7.14 11.09 6.74 9.44

Effective Duration % (avg.) 4.77 6.80 4.68 6.35Current Yield % (avg.) 6.27 5.77 5.69 4.81

Yield to Worst % (avg.) 6.75 4.88 6.21 4.56

Coupon % (avg.) 6.20 5.87 5.22 4.74

Rating % (avg.) BBB2 BBB3 BBB2 BBB1

Month-End 2/29/2016 Month-End 2/29/2016

Investment Category 1 MO 3 MO YTD 1 YR 3 YR† 5 Y

EM Local Sovereigns* 1.44 -0.47 1.80 -12.50 -9.53 -3.

EM USD & EUR Sovereigns* 1.71 1.19 1.88 0.48 1.31 4.9

EM USD Corporates* 1.23 -0.63 0.95 0.99 1.55 4.6

US Corporates* 0.69 -0.44 0.76 -2.70 1.88 4.4

http://www.vaneck.com/


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Aside from struggling with deceleration in its economy,China continues to wrestle with communication about itspolicies, particularly regarding the CNY. During Februaryhe government made an effort to support the CNY. Theeffect may be temporary but the CNY did strengthenversus the U.S. dollar during the month.

Most EM currencies strengthened versus the dollar in

February. Indonesia was the outperformer, as thendonesian rupiah gained over 3%. The Chilean peso andPolish zloty gained over 2%, while the Brazilian real andRomanian leu gained over 1% versus the dollar.Colombia, Peru, and Malaysia were among theunderperformers in the local-currency space. Overall,ocal-currency debt was up 1.4% in February in dollarerms. Hard-currency sovereign debt (+1.9%) andcorporate debt (+1.1%) were led by gains in Venezuelanand Argentine bonds. One example of “low willingness topay” trumping “ability to pay,” Argentina moved stepscloser to resolving the bulk of its outstanding defaultedbonds. Lower U.S. Treasury yields also boosted hard-currency debt; the U.S. 10-year Treasury note’s yield fell

21 basis points during the month to 1.74%.

While the scope and timing of future central bank activitys unclear, monetary policy divergence between the U.S.and other developed markets remains the base case for2016. EM central banks are diverse in their policydirections at the moment and none of them appear closeo pursuing zero or negative rates policies. Thedetermination of whether the second half of Februarymarked the beginning of a sustained recovery in EMassets is difficult to make. The dispersion of returnsaround EM currencies and credits suggests, at the veryeast, that some asset flows are again being directedowards value-oriented plays within EM.

Source for all data: J.P. Morgan Emerging Markets Bond IndexMonitor, as of 2/29/16. The Moody’s rating scale is as follows,rom excellent (high grade) to poor (including default): Aaa to C,

with intermediate ratings offered at each level between Aa and

Caa. Anything lower than a Baa rating is considered a non-

nvestment-grade or high-yield bond.

GBI-EM Countries

Currency 2/29/2016 1/29/2016%

ChangeBrazilian Real 3.98 4.02 1.01Chilean Peso 694.85 710.30 2.22Colombian Peso 3319.03 3294.15 -0.75Hungarian Forint 285.42 287.32 0.67ndonesian Rupiah 13372.00 13775.00 3.01Malaysian Ringgit 4.21 4.16 -1.19Mexican Peso 18.09 18.17 0.45Nigerian Naira 199.25 199.05 -0.10Peruvian New Sol 3.53 3.47 -1.58Philippines Peso 47.55 47.65 0.21Polish Zloty 4.00 4.08 2.09Russian Rouble 75.04 75.20 0.21Romanian New Leu 4.12 4.19 1.90South African Rand 15.78 15.90 0.73Thailand Baht 35.63 35.73 0.29Turkish New Lira 2.95 2.96 0.17

FX Rates (Per U.S. Dollar)

GBI-EM Index 1-Month Total Return by Country

10-Year Local Currency Sovereign Bond Yields (%)

Source: FactSet as of 2/29/16.

Source: FactSet as of 2

All performance quoted represents past performance. Past performance is no guarantee of future resNot representative of fund or fund indexes. Indexes are unmanaged and are not securities in which aninvestment can be made.

Credit rating scale is as follows, from excellent (high grade) to poor (including default): AAA to C, witintermediate ratings offered at each level between AA and CCC. Anything rating lower than a BBB- ris considered a non-investment-grade or high-yield bond.

Source: FactSet as of 2

Credit Quality (%)Market Review (continued)

Source: FactSet, BofA Merrill Lynch composite as of 2

Index AAA AA A BBB BB B Below B

EM Local Sovereigns* 19.85 -- 26.92 42.25 9.11 -- -- 1

EM USD & EUR Sovereigns* -- 6.10 11.46 44.76 20.15 13.76 3.77

EM USD Corporates* 0.56 8.91 22.54 33.84 22.18 8.45 3.50 0

US Corporates* 1.19 9.17 35.73 35.85 8.95 6.85 2.25 0

15.2

10.49.4 9.3 8.9 8.5

7.6 7.56.1

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Local FX Return USD Return


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Market Vectors ETFs and Van Eck Funds: EM Bond Fund Total Returns (%)

Market Vectors ETFs and Van Eck Funds: EM Bond Fund Characteristics

† Annualized. For funds with less than one year history, the life return is cumulative. The performance quoted represents past performance. Past performance is noguarantee of future results. Performance information for the funds reflect temporary waivers of expenses and/or fees. Had the funds incurred all expenses, investmenteturns would have been reduced. The investment return and value of shares of funds will fluctuate so that an investor's shares, when sold, may be worth more or less thaheir original cost. Performance may be lower or higher than performance data quoted. Fund returns assume that dividends and capital gains distributions have beeneinvested in the Fund at NAV.

Distribution Frequency is anticipated but not guaranteed. 30-Day SEC Yield is a standard calculation developed by the Securities and Exchange Commission that allowairer comparisons among bond funds. It is based on the most recent 30-day period. This yield figure reflects the interest earned during the period after deducting the fundexpenses for the period. In the absence of temporary expense waivers or reimbursements, the 30-day SEC yield as of February 29, 2015 would have been 0.72% for CBO4.51% for EMAG, 5.99% for EMLC, 9.98% for HYEM, 7.72% for IHY, 1.96% for EMBAX, and 2.80% for EMBUX.

The Adviser has agreed to waive fees and/or pay CBON fund expenses from exceeding 0.50% of average daily net assets per year until at least 9/1/16; EMAG from excee0.49% of average daily net assets per year until at least 9/1/16; EMLC from exceeding 0.47% of average daily net assets per year until at least 9/1/16; HYEM from exceed0.40% of average daily net assets per year until at least 9/1/16; IHY from exceeding 0.40% of average daily net assets per year until at least 9/1/16. The expense limitationexpected to continue until the Funds’ Board of Trustees acts to discontinue all or a portion of such expense limitation. The Van Eck Unconstrained Emerging Markets BonFund’s expenses are calculated for the 12-month period ending 05/01/16: Class A: Expenses are capped contractually through 05/01/16 at 1.25%. Class I: Expenses arecapped contractually through 05/01/16 at 0.95%. Caps exclude certain expenses, such as interest.

Corporate Overview (as of 12/31/15)

Van Eck is a New York-based, privately held asset manager with a focus on hard assets and emerging markets and $25.4B in assets under manageme

Since its founding in 1955, the company has focused on investing in international markets – initially through a mutual fund designed to meet the need ofU.S. investors for exposure to Europe and Asia. Gold equity (1968), emerging market equity (1993), natural resource equity (1994) and commodity index(2010) strategies followed. The Market Vectors ETF business was founded in 2006 and now offers over 50 funds in a range of asset classes and sectors

Van Eck manages $3.7B in EM equity and $5.8B in fixed income assets, of which $1.9B is in active and passive EM debt focused strategies.

Name Ticker 30-Day SEC Yield (%) Effective Duration (Yr.) Distribution Frequency Index/Bench

as of 02/29/2016

Market Vectors ETFs

ChinaAMC China Bond ETF CBON 2.25 4.64 Monthly CDHATR

Emerging Markets Aggregate Bond ETF EMAG 5.22 4.79 Monthly MVEMAG

J.P. Morgan EM Local Currency Bond ETF EMLC 6.11 4.73 Monthly GBIEMCO

Emerging Markets High Yield Bond ETF HYEM 10.14 3.48 Monthly EMLH*

International High Yield Bond ETF IHY 7.99 3.56 Monthly HXUS

Van Eck Mutual Funds

Unconstrained Emerging Markets Bond Fund: Class A EMBAX 2.39 5.40 Monthly GBI-EM

Unconstrained Emerging Markets Bond Fund: Class I EMBUX 2.83 5.40 Monthly GBI-EM

Month-End 2/29/2016 Quarter-End 12/31/2015 Expenses (%)Ticker Fund 1 MO 3 MO YTD 1 YR 3 YR† 5 YR† LIFE† Gross Net Incep

Market Vectors ETFs

CBON ChinaAMC China Bond ETFPrice 0.53 -1.08 -0.22 0.61 - - -1.17

0.87 0.50 11/10/NAV 0.44 -1.03 -0.51 3.13 - - 0.53

EMAG Emerging Markets Aggregate Bond ETFPrice 3.53 0.20 2.80 -6.98 -4.79 - -0.47

1.01 0.49 05/11/NAV 1.24 -0.34 1.65 -4.81 -3.51 - 0.02

EMLC J.P. Morgan EM Local Currency Bond ETFPrice 1.69 -0.72 2.07 -15.07 -10.15 -3.85 -2.20

0.49 0.47 07/22/NAV 1.33 -0.84 1.83 -14.64 -9.79 -3.69 -2.20

HYEM Emerging Markets High Yield Bond ETFPrice 0.90 -2.80 0.75 3.48 -0.21 - 2.86

0.47 0.40 05/08/NAV 1.26 -2.75 0.52 2.88 0.29 - 3.05

IHY International High Yield Bond ETFPrice 0.12 -2.81 -0.29 -3.13 -0.50 - 2.82

0.54 0.40 04/02/NAV 0.26 -2.84 -0.86 -3.57 0.12 - 3.10

Van Eck Mutual FundsUnconstrained Emerging Markets Bond Fund: Class A

EMBAX At Net Asset Value NAV 1.44 -1.15 0.86 -13.60 -5.71 - -2.02 1.32 1.25 07/09/EMBAX At Maximum 5.75% Sales Charge -4.36 -6.88 -5.00 -18.20 -8.26 - -3.29 1.32 1.25 07/09/

EMBUX Unconstrained Emerging Markets Bond Fund: Class I NAV 1.42 -0.99 1.00 -13.27 -5.41 - -1.75 0.95 0.95 07/09/

JPM GBI-EM Global Diversified Index 1.44 -0.47 1.80 -14.92 -9.95 -3.48 - - - -


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Some Differences between ETFs and Mutual Funds:

Unlike with mutual fund shares, retail investors can only purchase and sell ETF shares in market transactions. Because of differences in distribution and often lower transacosts, total operating expense ratios for ETFs often have been historically less than those for corresponding mutual funds. Many ETFs will disclose to the public their holdievery day, in addition to the quarterly disclosure required for all mutual funds. ETFs can be more tax efficient than mutual funds because ETF shares generally are redeemin-kind.” This means that an ETF may deliver specified portfolio securities to Authorized Participants who are redeeming Creati on Units instead of selling portfolio securiti

meet redemption demands, which could otherwise result in taxable gains to the ETF. Typically, such taxable gains (if not otherwise offset by the ETF) would be passed tho the retail investor. Very generally, the federal income tax consequences of investing in ETFs and mutual funds are comparable. For questions regarding the tax implicatof investments in specific ETFs and their consequences with respect to your unique situation, please consult your tax adviser.

mportant Disclosures:

Effective May 13, 2015, Market Vectors® Emerging Markets High Yield Bond ETF (HYEM) changed its underlying index from the BofA Merrill Lynch High Yield US EmergMarkets Liquid Corporate Plus Index (EMHY) to the BofA Merrill Lynch Diversified High Yield US Emerging Markets Corporate Plus Index (EMLH). Index history which incperiods prior to May 13, 2015 reflects a blend of the performance of EMHY and EMLH and is not intended for any third party use.

*Effective December 10, 2013, Market Vectors® LatAm Aggregate Bond ETF (BONO) changed its underlying index and changed its name to Market Vectors EmergingMarkets Aggregate Bond ETF (EMAG). The Fund’s investment objective changed to seeking to replicate as closely as possible, be fore fees and expenses, the price and yperformance of the Market Vectors® EM Aggregate Bond Index (MVEMAG), from seeking to replicate as closely as possible, before fees and expenses, the price and yielperformance of the BofA Merrill Lynch Broad Latin America Bond Index (LATS). Performance data prior to December 9, 2013 reflects that of BONO and LATS. Performandata from December 10, 2013 and on, reflects that of EMAG and MVEMAG. All Index history reflects a blend of the performance of the aforementioned Indexes (MVEMAGLATS) AND IS NOT INTENDED FOR ANY THIRD PARTY USE. LATS is a trademark of Merrill Lynch, Pierce, Fenner & Smith Incorporation, which neither sponsors norendorses EMAG and makes no warranty or representation as to the accuracy and/or completeness of this Index.

Correlation is a statistical measure of how two securities move in relation to each other. It is computed into what is known as the correlation coefficient, which ranges betw1 and +1. Perfect positive correlation (a correlation co-efficient of +1) implies that as one security moves, either up or down, the other security will move in lockstep, in the

same direction. Alternatively, perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move inopposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random. Standard deviation is a statisticalmeasurement that sheds light on historical volatility. For example, a volatile stock will have a high standard deviation while the deviation of a stable blue chip stock will be A large dispersion tells us how much the return on the fund is deviating from the expected normal returns. Duration to Worst is a measure of the duration of a bond compusing the bond's nearest call date or maturity, whichever comes first. This measure ignores future cash flow fluctuations due to embedded optionality. Effective Durationmeasure of the average percentage change in a bond’s price, given an upward and downward parallel shift in the Treasury (spot ) curve, where the change in price reflectexercise of embedded call or put options, optional prepayments, and/or changes in adjustable rate coupons according to formulas which may include periodic or lifetime racaps/floors, etc. Yield to Worst measures the lowest of either yield-to-maturity or yield-to-call date on every possible call date.

Principal International and Emerging Markets High Yield Risk Factors: Fixed income securities are subject to credit risk and interest rate risk. High yield bonds may subject to greater risk of loss of income and principal and are likely to be more sensitive to adverse economic changes than higher rated securities. International investingnvolves additional risks which include greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foregovernments, decreased market liquidity and political instability. Changes in currency exchange rates may negatively impact the Fund’s return. Investments in emergingmarkets securities are subject to elevated risks which include, among others, expropriation, confiscatory taxation, issues with repatriation of investment income, limitationsoreign ownership, political instability, armed conflict and social instability. Investors should be willing to accept a high degree of volatility and the potential of significant los

The United States and other nations or international organizations may impose additional economic sanctions or take other actions that may adversely affect Russian-relassuers, including companies in various sectors of the Russian economy. These sanctions, any future sanctions or other actions, or even the threat of further sanctions or actions, may negatively affect the value and liquidity of a Fund’s portfolio and may impair the Fund's ability to achieve its investment objective.

The listed indices throughout this piece are unmanaged and are not securities in which an investment can be made. Please note that the market review herein represents opinion of the author and these opinions may change at any time and from time to time. Not intended to be a forecast of future events, a guarantee of future results ornvestment advice. Current market conditions may not continue. Non-Van Eck Global proprietary information contained herein has been obtained from sources believed toeliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Van Eck

Global. © Van Eck Securities Corporation.

The “net asset value” (NAV) of a fund is determined at the close of each business day, and represents the dollar value of one share of a fund; it is calculated by taking theunds’ total assets subtracting total liabilities, and dividing by total shares outstanding. For an ETF, NAV is not necessarily the same as its intraday trading value. Investorsshould not expect to buy or sell ETF shares at NAV. The market price (price) of an ETF is based on the closing price.

There are risks involved with investing in funds, including possible loss of money. ETF shares are not actively managed and are subject to risks similar to those of stocks,ncluding those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. Debt securities carry interest rate and credit risk.nterest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. Credit risk is the risk of loss on an investment due to the deteriorationssuer's financial health. A Funds' underlying securities may be subject to call risk, which may result in the Funds having to reinvest the proceeds at lower interest rates,esulting in a decline in a Funds' income.

nvesting involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interrates rise. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain prospectus and summary prospectus, which contain this and other information, call 888.826.2333 or visit vaneck.com. Please read the prospecand summary prospectus carefully before investing.

Van Eck Securities Corporation, Distributor, 666 Third Avenue, New York, NY 100171.800.826.2333 www.vaneck.com/etfs
http://www.vaneck.com/http://www.vaneck.com/http://www.vaneck.com/

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Public Em Debt Monitor 2016 3