Asian bonds and related exchange traded funds are experiencing a swift rebound after falling behind in the fixed-income space.
For instance, the WisdomTree Asia Local Debt Fund (NYSEArca: ALD), which includes largely investment-grade Asian debt, rose 2.1% over the past month while the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) gained 1.8%.
Fueling the optimism in Asia’s bond market, notably in China, Beijing recently relaxed mortgage policies for home buyers, reports Fiona Law for the Wall Street Journal.
Investors can also access China’s debt market through Chinese local-currency-denominated bond ETFs, such as the Market Vectors ChinaAMC China Bond ETF (NYSEArca: CBON), PowerShares Chinese Yuan Dim Sum Bond Portfolio (NYSEArca: DSUM), KraneShares E Fund China Commercial Paper ETF (NYSEArca; KCNY) and Global X GF China Bond ETF (NYSEArca: CHNB). Year-to-date, CBON dipped 1.3%, DSUM added 0.2%, KCNY was relatively flat and CHNB rose 0.9%.
The Chinese bond ETFs also come with attractive yields. For instance, CBON has a 3.6% 30-day SEC yield, DSUM has a 5.27% 30-day SEC yield, KCNY has a 3.93% 30-day SEC yield and CHNB has a 4.27% 30-day SEC yield.
ALD only includes a 6.3% tilt toward China and focuses more on debt from Australia 13.3%, Singapore 12.8%, South Korea 12.5% and Malaysia 12.3%.
Chinese and Asian bonds were stuck in a rut at the start of the year after a small Chinese real estate company missed an interest payment, which triggered default concerns and halted fundraising efforts in the market. [China Default Concerns Raise Fears Over EM Bond ETF Credit Risks]