Amundi launches Chinese Treasury & policy bank bond ETF

Dec 17th, 2022 | By | Category: Fixed Income

Amundi has introduced a new fixed income ETF in Europe providing exposure to government and policy bank bonds issued in China.

Amundi launches Chinese Treasury & policy bank bond ETF

Chinese bonds may act as effective diversifiers for traditional fixed income portfolios.

The Amundi China CNY Bonds UCITS ETF has been listed on Xetra in US dollars (CNYF GY) and euros (CNYE GY).

The fund is linked to the Bloomberg China Treasury + Policy Bank Index which reflects the performance of fixed-rate renminbi-denominated treasury bonds and policy bank bonds listed on China’s interbank bond market.

Floating-rate, inflation-linked, and capitalizing/amortizing bonds are not eligible for inclusion in the index.

Policy banks include China Development Bank, Agricultural Development Bank of China, and Export-Import Bank of China. These three policy banks are responsible for financing economic and trade development as well as state-invested projects.

Eligible securities must have a remaining maturity greater than one year and a minimum size of CNY 5bn. Constituents are weighted by market value, and the index is rebalanced on a monthly basis.

The fund may serve as a portfolio diversifier as Chinese bond yields have historically exhibited a near-zero correlation with US, German, and Japanese government bonds.

The ETF comes with an expense ratio of 0.20%.

The fund enters a crowded field with BlackRock, Goldman Sachs, JP Morgan, DWS, KraneShares, SSGA, and LGIM all offering ETFs either targeting Chinese Treasuries exclusively or combining government and policy bank bonds.

The iShares China CNY Bond UCITS ETF (CNYB LN) is the largest of these with $3.7bn in assets under management. It comes with an expense ratio of 0.35%.

The cheapest is the $20m SPDR Bloomberg Barclays China Treasury Bond UCITS ETF (SPP8 GY) which has an expense ratio of 0.19%.

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