This is an actively managed bond ETF that invests mainly in government and other bonds issued by emerging market countries in their own currencies. It allocates most of its net assets to bonds denominated in emerging market local currencies, and the management team actively adjusts country, currency and maturity weights.

It suits income-focused investors who want diversified exposure to emerging market currencies and interest rates in addition to dollar bonds.

It is an ETF run by WisdomTree using an active management approach.

The fund holds a broad range of government and other bonds issued by many emerging market countries in their own currencies, and the management team actively adjusts weights and duration based on each country's interest rate and currency outlook. It avoids concentration in a single country and manages emerging market currency and interest rate exposure through broad diversification.

• Invests in bonds denominated in emerging market local currencies rather than dollars
• Active management that adjusts country and currency weights at its discretion

Assets under management (AUM) stand at $137.8M, and the total expense ratio is 0.55% per year.

Compared with EMB, a dollar-denominated emerging market bond ETF, its currency exposure is structured differently, and the key difference is that exchange rate movements flow directly into performance.

Performance tends to be quite volatile depending on emerging market currencies and local interest rate trends. During periods of dollar strength, exchange rates act as a drag, while during periods of dollar weakness the currency side tends to provide a benefit. Short-term moves are influenced by both US interest rates and emerging market policy.

Fund flows split depending on global risk appetite and the direction of the dollar, and interest tends to grow alongside income demand in environments where sentiment toward emerging market currencies is favorable. Within the bond category, the fund is small to mid-sized.

Currency diversification and income are its strengths, but the volatility of emerging market currencies and credit comes along with them, which is the drawback.

The EMB shown in the table belongs to the same emerging market bond category, but it invests in dollar-denominated bonds, so its currency exposure is structured differently. GOVT, SHV and GBIL are centered on US Treasuries, making them relatively conservative alternatives free of emerging market currency risk. As a direct substitute that tracks the same emerging market local currency bonds, there is EMLC, which can be considered together as an option with similar currency exposure.

Here are the points to review before investing in ELD. Because this product is affected by emerging market currencies, interest rates and credit risk all at once, it is wise to thoroughly check its currency exposure, fees and monthly distribution structure in advance.

Emerging market currency weakness, rising interest rates and credit risk in some countries can combine to increase short-term volatility. In periods when risk aversion intensifies, losses can widen, so caution is needed.

It is worth considering as a diversification tool for income investors who want emerging market currency and interest rate exposure that differs from dollar bonds. For those who want to avoid currency risk, the dollar-denominated EMB or US Treasury-centered alternatives may be more suitable.