Guggenheim Investments launched the first Chinese bond exchange traded fund denominated in the local currencies on Thursday. Invesco PowerShares unveiled its new ETF offering that will provide investors access to the yuan-denominated debt market, as well.
According to regulatory filings, the Guggenheim Yuan Bond ETF (NYSEArca: RMB) will utilize a sampling strategy on rules-based index that holds fixed-income securities issued by Chinese or non-Chinese companies, agencies and the government. Bonds held by RMB are denominated in renminbi. The bonds need to have a 250 million yuan value and a rating of BBB- or better. The fund has an expense ratio of 0.65%.
In a telephone interview, David Botset, senior V.P. of product development at Guggenheim, emphasized that the RMB ETF is based on the AlphaShares China Yuan Bond Index and includes investment grade issues. Botset also pointed out that they will be working directly with Hong Kong traders and managers to help provide U.S. investors with direct exposure to the Chinese currency market.
According to PowerShares, the PowerShares Chinese Yuan Dim Sum Bond Portfolio (NYSEArca: DSUM) will begin trading on Friday, September 23. The fund will provide exposure to Chinese yuan-denominated “Dim Sum” bonds that are issued and settled outside of China and will issue monthly distributions.
DSUM has an expense ratio of 0.45%.