Yesterday (8/9/10) WisdomTree made a little bit of a splash with the launch of WisdomTree Emerging Markets Local Debt Fund (ELD). We call it a “splash” because the firm apparently lined up some big buyers even before the new ETF hit the tape. Assets are already at $125 million.

ELD is very similar to Market Vectors Emerging Markets Local Currency Bond ETF (EMLC), which also came out recently (7/23/10). Both seek to own a portfolio of emerging market government debt denominated in local currency rather than U.S. dollars. As noted in our story on EMLC, this gives investors exposure to foreign exchange risk as well as credit risk. Whether these risks will carry a commensurate reward is not yet known.

There is an important difference between EMLC and ELD, however. The WisdomTree ETF is actively managed. The fund manager has flexibility to change the country weightings on short notice instead of being tied to an index like EMLC. This could prove helpful in the event of a sovereign debt crisis tied to a particular market.

Top country weightings in ELD are Brazil, Mexico, Indonesia, Malaysia, Thailand, Turkey and Korea. The expense ratio is projected to be 0.55%, slightly higher than EMLC, but the final yields both look like they will be similar at around 6% currently. This is far more than can be found in developed country government bonds – which may be one reason ELD attracted significant assets so quickly.

More information can be found on the WisdomTree site’s ELD summary page.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.