ETF Trends
ETF Trends

KraneShares, the issuer of U.S.-listed China exchange traded funds, and China’s E Fund Management are partnering to launch a new fixed income ETF.

The new ETF will trade in the U.S. Madison Marriage of the Financial Times broke the news Sunday.

E Fund Management, one of China’s largest asset managers is mulling partnerships with other U.S.-based fund managers and is also considering opening a U.S. office, the Financial Times reported. The KraneShares/E Fund ETF is expected to focus on corporate debt issued by Chinese state-run companies, according to the FT.

U.S. investors can currently access Chinese debt via the PowerShares Chinese Yuan Dim Sum Bond Portfolio (NYSEArca: DSUM) and the Market Vectors Renminbi Bond ETF (NYSEArca: CHLC), among other offerings.

Dim sum bonds, named after the bit-sized Chinese dish popular in Cantonese restaurants, are Chinese yuan-denominated debt issued by international corporations or entities. Additionally, yuan-denominated securities help limit U.S. investors’ exposure to interest rate risk at home. The dim sum bonds move in response to shifts in China’s rates. [Use Dim Sum ETFs for Fixed Income Diversity]

KraneShares brought its first ETFs to market just over a year ago, but the firm has quickly become recognizable due to the popularity of its KraneShares CSI China Internet Fund (NasdaqGM: KWEB). KWEB has become a favorite ETF of traders and investors looking to gain exposure to a broad swath of high-flying Chinese Internet stocks. [ETFs for a VIP of Internet Stocks]

KraneShares also sponsors the KraneShares CSI China Five Year Plan ETF (NYSEArca: KFYP) and the KraneShares Bosera MSCI China ETF (NYSEArca: KBA).

KBA, which debuted in March, is the only China A-shares ETF to track an index issued by MSCI. KraneShares partnership with E Fund Management is the former’s second such arrangement with a Chinese asset manager.

The firm partners with Bosera Asset Management on KBA. Partnerships with local investment houses are necessary for foreign fund issuers to receive an investment quota from a Chinese regulatory agency for a Renminbi Qualified Foreign Institutional Investor (RQFII) status, which is required for issuing funds that deliver direct access to China’s A-shares markets.

 

ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.