Salomon Launches New Debt ETF

Salomon Brothers Asset Management said that the Salomon Brothers Emerging Markets Debt Fund began trading on the New York Stock Exchange Thursday. The new fund offering is a non-diversified, closed-end fund that will focus primarily on total return with high current income as a secondary objective, the New York fund manager said.

The fund plans to invest in a portfolio of debt securities of emerging markets issues. In an effort to maximize its returns, the fund may employ leverage through borrowings and often up to 33% of its total assets. This also means that the fund is subject to greater volatility in the net asset value of its shares.

The fund raised roughly $552 million through the initial public offering with Citigroup Global Markets serving as the lead underwriter. The timing of the IPO coincides with a widespread scandal in the mutual fund industry, one that has prompted many investment pundits to tout exchange-traded funds as a cheaper alternative to traditional mutual funds.

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