As China continues to recover from the COVID-19 pandemic, more investors are looking for opportunities in the country’s bond market. Global investors in particular have been piling into Singapore-based CSOP Asset Management’s first exchange traded fund (ETF), which reached $1 billion in assets.
According to a Financial Times article, the ETF “in Singapore has already become the largest ETF domiciled in the city-state, underscoring strong interest from global investors wanting access to China’s onshore debt markets. The firm’s ICBC CSOP FTSE Chinese Government Bond Index ETF, which is benchmarked against the FTSE Chinese Government Bond Index, was listed on the Singapore Exchange on September 21.”
“CSOP AM, a subsidiary of Shenzhen-based China Southern Asset Management, has now announced that the ETF, the first Singapore-listed ETF investing directly in China’s onshore bond market, had attracted more than $1bn in assets,” the article added.
For investors wanting to get in on the China bond action in the U.S., here are a pair of China-focused bond exchange-traded funds (ETFs) to consider:
- VanEck Vectors ChinaAMC China Bond ETF (CBON): seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the ChinaBond China High Quality Bond Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index. The index is comprised of fixed-rate, Renminbi (“RMB”)-denominated bonds issued in the People’s Republic of China (“China” or the “PRC”) by Chinese credit, governmental and quasi-governmental (e.g., policy banks) issuers (“RMB Bonds”).
- KraneShares CCBS China Corporate High Yield Bond USD Index ETF (KCCB): seeks to provide investment results that, before fees and expenses, track the price and yield performance of a specific fixed income securities index. The fund’s current index is the Solactive USD China Corporate High Yield Bond Index. Under normal circumstances, the fund will invest at least 80% of its total assets in components of the underlying index and to-be-announced transactions representing such components. The underlying index seeks to track the performance of outstanding high yield debt securities denominated in U.S. dollars issued by Chinese companies.
Additionally, the below ETFs could benefit from increased China market interest moving forward:
- Xtrackers CSI 300 China A-Shares ETF (NYSEArca: ASHR): seeks investment results that correspond to the CSI 300 Index. The underlying index is designed to reflect the price fluctuation and performance of the China A-Share market and is composed of the 300 largest and most liquid stocks in the China A-Share market.
- Xtrackers Harvest CSI 500 China-A Shares Small Cap ETF (ASHS): seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 500 Index, which is designed to reflect the price fluctuation and performance of small-cap companies in the China A-Share market and is composed of the 500 smallest and most liquid stocks in the China A-Share market.
- Xtrackers MSCI China A Inclusion Equity ETF (ASHX): seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI China A Inclusion Index, which is designed to track the equity market performance of China A-Shares that are accessible through the Shanghai-Hong Kong Stock Connect program or the Shenzhen-Hong Kong Stock Connect program.
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