According to the ETF’s summary prospectus, GEMD invests at least 80% of its assets in securities included in the FTSE Goldman Sachs Emerging Markets USD Bond Index, which tracks the performance of investment-grade and high-yield bonds issued by emerging market governments or quasi-government entities denominated in U.S. dollars that meet certain liquidity, governance, and fundamental screening criteria. GEMD is passively managed by GSAM’s global fixed income team.
Per the fund’s advisor, GSAM, the index employs a transparent process designed to identify an investable universe, then eliminates a subset of issuers with deteriorating fundamentals to potentially offer improved exposure to U.S. dollar-denominated emerging markets bonds. The index had 521 constituents as of December 1, 2021.
“We believe excluding a subset of issuers with deteriorating fundamentals, i.e. worsening Governance, Import Coverage Ratio and Inflation, can help reduce exposure to issuers more likely to underperform and experience higher volatility,” says a note on the ETF issuer’s website. “We believe this approach can help deliver smoother performance over the course of a market cycle.”
GEMD has an expense ratio of 0.45%, but GSAM has agreed to a fee waiver, bringing it down to 0% through February 17, 2023.
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