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Van Eck to launch first China bond-focused ETF in the US


Van Eck Global has launched the Market Vectors ChinaAMC China Bond ETF (CBON), a US‐listed exchange-traded fund designed to provide investors with direct access to China’s onshore bond market.

Van Eck launched the first ETF providing exposure to A-shares in the US (Market Vectors ChinaAMC A-Share ETF) on 13 October 2010, and this summer it launched a Chinese equity ETF (Market Vectors ChinaAMC SME-ChiNext ETF), primarily focused on innovative, non government-owned companies.
CBON seeks to invest in all major segments of the Chinese fixed income markets, including sovereigns, policy banks, and high rated corporate bonds.
“China’s domestic bond market is expanding and evolving at the same time. While the full liberalisation of the markets is likely to take a long time, movement towards greater access for borrowers and lenders, and a higher degree of market oriented financings such as bond issuance have already greatly broadened the opportunity set for local investors,” says Fran Rodilosso, senior investment officer for Market Vectors ETFs.
CBON is the newest addition to Van Eck’s family of emerging markets bond ETFs which include the largest local-currency bond ETF in the US, Market Vectors Emerging Markets Local Currency ETF (NYSE Arca: EMLC), and the largest emerging markets corporate bond ETF in the US, Market Vectors Emerging Markets High Yield Bond ETF (NYSE Arca: HYEM), by assets under management as of October 31, 2014.
“China is currently the largest emerging markets bond market, yet to this point investors outside of mainland China have been mostly excluded from direct ownership of locally issued bonds,” says Rodilosso. “China’s onshore bond market has had historically low correlation to core asset classes and has delivered attractive yields in comparison to developed bond markets in recent years.”
CBON seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the ChinaBond China High Quality Bond Index, ticker: CDHATRID. The Index is comprised of fixed-rate, Renminbi (RMB)-denominated bonds issued in the People’s Republic of China by Chinese credit, governmental and quasi-governmental (eg, policy banks) issuers. As of 10 November, the yield to maturity for the index was 4.1 per cent. 

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