Tap China’s Bond Market With 3 New ETFs
A Seeking Alpha Contribution
Summary
- Three new ETFs open up China’s onshore bond market to individual investors.
- CBON offers a longer duration portfolio and a lower yield due to China’s flat yield curve; CHNB has shorter maturity and higher yield.
- KCNY has the highest yield and shortest duration of the three new funds, but it still yields less than DSUM, a 3-year-old fund covering the offshore bond market.
A small opening in China’s bond market led to a flurry of activity in the ETF world last year, with three Chinese bond ETFs launching in late 2014. These new funds are trying to grab market share from the largest Chinese offshore bond ETF, the PowerShares Chinese Yuan Dim Sum Bond ETF (NYSEARCA:DSUM), which has faced little competition since its launch in 2011.
Dim sum bonds are renminbi-denominated bonds that trade offshore. Issuers are usually Chinese firms, but there are also foreign companies that have issued renminbi bonds, including McDonald’s (NYSE:MCD)…. To continue reading please, click here.