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Chinese commercial paper attracts investors in US fixed income ETF market


E Fund Management’s China Commercial Paper ETF, jointly launched and managed with KraneShares, has become the largest RQFII bond ETF in the US market. 

Listed on 3 December 2014 on the New York Stock Exchange (NYSE), the ETF, seeking to deliver yields from investment grade commercial papers issued in Mainland China, is the first RQFII commercial paper ETF in the United States and the first short term RQFII bond ETF with interbank market access outside China. After half a year's operation, the ETF has gradually earned recognition from US investors. Especially during recent period when Renminbi maintains stable, the ETF has been subscribed constantly, with current asset of over USD50 million, wherein asset under management (AUM) of this year rapidly increased 19 million with an accumulated volume of transactions within one week exceeding 500,000, becoming the most liquid product among its peers. With the outstanding performance, the product was recommended by as the most innovative bond ETF.

Gaohui Huang, CEO of E Fund HK, says: "Chinese onshore bond market has developed rapidly over the last decade, and has become one of the largest markets in the emerging economies. Half a year after its debut, the ETF already grows into the largest RQFII bond ETF in the US market, introducing a new way into Chinese bond market for US money market funds with low interest rate and bank deposit market, becoming an indicator reflecting US investors' interest in Renminbi." 

"China money market can achieve a high return, which can't be achieved by other funds," says David Zhang, E Fund HK chief investment officer and co-portfolio manager of the Fund. "Chinese onshore commercial paper market is very liquid, with more than USD270 bilion USD outstanding amount and an average USD3 billion USD daily trading volume. As investors have great interest in Chinese market, the product will continue to provide a superior investment option for US investors." 

Jonathan Krane, CEO of KraneShares, says: "China has a very flat yield curve with relatively high interest rates versus the US, specifically in maturities under one year. For example, over the past twelve months China commercial paper returned 5.85 per cent+ in USD compared to US commercial paper at less than 0.20 per cent, that's a 5.65 per cent difference. E Fund Management is the largest fixed income manager in China and the second largest RQFII manager globally. Our cooperation, launching the ETF on the New York Stock Exchange, has been recognised by the local market and achieved outstanding performance, which further proves it is a right choice to cooperate with E Fund, because (capital/ investment ) turning to emerging markets is inevitable."

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