Global X Funds, the New York-based provider of exchange-traded funds has launched the Global X GF China Bond ETF (NYSE Arca: CHNB), which…
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tracks the S&P China Composite Select Bond Index. The fund offers direct access to China’s onshore bond market. Global X brings the fund to market in partnership with GF International Investment Management Limited, one of the leading fund managers in China, who is also serving as the fund’s sub-advisor.
The fund’s launch reflects the liberalization of China’s capital markets, which have only in the past few years been opened to foreign investors. Until recently, foreign investors were largely limited to Chinese dim sum bonds, which are issued outside of mainland China and do not provide true access to China’s debt market. In contrast, the Global X GF China Bond ETF will hold Chinese yuan-denominated debt issued in mainland China, accessing a debt market currently valued at approximately $4.5 trillion. Following the US and Japan, the country’s local currency debt market is the 3rd largest in the world.
The fund focuses its exposure on the high end of China’s credit quality spectrum, with the majority of its exposure in Chinese government and agency bonds. At each monthly rebalance, CHNB allocates 23% of its exposure to Chinese government bonds, 32% to agencies, and 45% to central state owned enterprises.
“We worked vigorously with GF International to bring Chinese onshore bonds to market” said Bruno del Ama, chief executive officer of Global X Funds. “Few asset classes of this size have been unavailable to US investors, and bringing direct access to Chinese government debt through an ETF presents a tremendous opportunity for institutions and investors seeking to diversify their income.”
“We are excited to partner with Global X to bring Chinese onshore bonds to US investors,” said Nathan Lin, CEO of GF International. “Onshore government bonds currently offer a significant yield pickup from dim sum bonds and the sovereign debt of other major economies.”
“S&P Dow Jones Indices is proud to continue to play a leading and critical role in providing relevant and transparent fixed income benchmarks and supporting index-based solutions in China,” says JR Rieger, Head of Fixed Income for S&P Dow Jones Indices. “China is an important part of our global growth plan, and we are committed to innovate and provide greater benchmarking tools, research, and data for investors seeking exposure to the expanding bond market.”
Source: ETFWorld.com
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