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Van Eck Global Launches Asian Bond ETF
October 17, 2011
Van Eck Global introduced another emerging markets fund this time focused on Asia’s bond market.
The Market Vectors Renminbi Bond ETF (NYSEArca: CHLC) tracks the performance and yield of RMB denominated investment grade bonds or unrated bonds from investment grade issuers in and outside of China. Chinese renminibi (RMB)-denominated bonds are often referred to as "dim sum" bonds. CHLC seeks to track, before fees and expenses, the price and yield performance of the Market Vectors Renminbi Bond Index.
China’s economy has been slowing and there’s been an increase in questions about its accounting methods for publicly traded companies based there.
"The world is transitioning from a period of U.S. dollar dominance to an era of currency blocs that better reflect the dispersion of economic growth. Certainly, the renminbi will be one of those currency blocs and China has taken significant steps to internationalize the RMB over the past two years," said Jan van Eck, Principal at Van Eck Global. "As this trend continues, investors should consider allocating to each of these blocs over time, but neither China stocks nor China bonds are represented in widely used indices.”
The launch of CHLC reflects an increased focus in Van Eck's ETF line up to the China investment theme. In 2008, the firm distributed the Market Vectors Chinese Renminbi/USD ETN (NYSEArca: CNY). In 2010 the firm launched the Market Vectors China ETF (NYSEArca: PEK), whose underlying index is composed solely of China A-Shares.
Since the beginning of the year, the broader Chinese stock market (NYSEArca: GXC) has declined around 15% in value, while Chinese large caps (NYSEArca: FXI) are down 18.23%.
"Given China's recent rapid economic growth, a market consensus has developed that the country's currency is undervalued," said Adam Phillips, Managing Director of ETFs at Van Eck Global. "CHLC will allow investors to gain exposure to high-quality RMB-denominated bonds, thereby providing the potential for investment income as well as currency appreciation, all through a transparent and cost efficient ETF."
The annual expenses for CHLC are 0.39%, making it the lowest cost “dim sum” bond ETF among its peers. |
