Two exchange traded fund providers, Guggenheim Investments and Invesco PowerShares, have listed exchange traded funds that target the offshore Chinese Yuan “Dim Sum” bond market.
The bond ETFs provide investors with the opportunity to gain exposure to Chinese yuan, which has become more open to foreign investors as the Chinese government tries to internationalize its currency.
“The Guggenheim Yuan Bond ETF allows fixed-income investors to participate in these developments and the dynamic growth potential of the Chinese economy,” Scott Minerd, Chief Investment Officer, Guggenheim Partners, commented in a press release.
First off, the Guggenheim Yuan Bond ETF (NYSEArca: RMB) holds 37 bond securities with an average maturity of 2.6 years and an average coupon of 1.8%. The fund has an expense ratio of 0.65%.
The ETF will try to replicate the AlphaShares Yuan Bond Index, which holds bonds issued by mainland Chinese companies and select non-mainland Chinese entities that have an investment grade of Baa3/BBB-/BBB- or better from Moody’s Investor Service, Standard & Poor’s and/or Fitch Ratings, respectively. The RMB fund tries to only include investment-grade securities. [Double Barrel Yuan Bond ETF Launches]