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Scott Minerd, chief investment officer, Guggenheim Partners

Guggenheim launches Yuan Bond ETF

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Guggenheim Investments has launched the Guggenheim Yuan Bond ETF, a fund that provides access to China’s growing Dim Sum bond market. The new offering from Guggenheim will seek to replicate the AlphaShares Yuan Bond Index (the Index), which includes bonds that are eligible for investment by US and other foreign investors.

 

The securities included in the Index are denominated in Chinese Yuan, whether issued by Chinese or non-Chinese issuers and traded in the secondary market, a market commonly referred to as the "Dim Sum" bond market.

"China is increasing the internationalization of its currency and the evolution of the Dim Sum bond market is reflective of that process," says Scott Minerd (pictured), Chief Investment Officer, Guggenheim Partners. "The Guggenheim Yuan Bond ETF allows fixed-income investors to participate in these developments and the dynamic growth potential of the Chinese economy."

This Guggenheim ETF provides investors with the opportunity to benefit from the appreciation potential of the Yuan, a currency that previously has been very difficult for investors to access.

"Yuan bonds could potentially not only provide income at a time when short-term rates are near zero in the US but also could give investors some capital appreciation if the Yuan continues to appreciate," says Burton Malkiel, Head of the AlphaShares Index Committee and founding member of AlphaShares, LLC.

The Dim Sum bond market offers a different yield curve from that against which US bonds are traded and provides the potential to access new opportunities, as reflected in the ever-changing relationship between the US Dollar and Yuan. Many foreign currencies have historically shown a low correlation to US equity and fixed-income markets. Guggenheim believes that having currency exposure may act as a complement to a US stock, bond and/or cash portfolio, broadening overall portfolio diversification.

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