An area of significant growth and innovation in the exchange traded fund space in the past year or so is that of Emerging Markets Bond products.
Specifically, there has been building institutional interest in China specific products in this category, and thus, there are now three investment options available to ETF users. PowerShares Chinese Yuan Dim Sum Bond (NYSEArca: DSUM) launched in September of last year, and tracks the Citigroup Dim Sum (Offshore CNY) Bond Index.
The ETF invests in bonds that are issued an settled outside of China, but are Chinese Yuan denominated.
Similarly, Market Vectors Renminbi Bond (NYSEArca: CHLC) is based on a proprietary index of Van Eck, the issuer, and invests in bonds that are issued by entities including Chinese, non-Chinese corporate, government, quasi-government, and supranational issuers.
Like DSUM, the bonds are denominated in Chinese Yuan.
Finally, Guggenheim Yuan Bond (NYSEArca: RMB) tracks the AlphaShares China Yuan Bond Index and also holds bonds that are issued by U.S. or foreign investors that are denominated in Chinese Yuan. None of these funds are identical, and thus they invest in different types of “paper.”