On this page, investors can learn about the evolution of China’s debt market, how to access Chinese bonds through an ETF, and how index selection makes a difference when selecting exposure to this asset class.
Insights from a Portfolio Manager
In this Q&A, Kheng Siang Ng, Asia Pacific Head of Fixed Income at State Street Global Advisors, describes the evolution of the Chinese debt market and explains how this asset class can enhance global bond portfolios in the current environment.
Topics of the interview include:
Accessing Chinese Bonds
Through our new ETF, European investors now have a transparent and cost-effective* vehicle for accessing Chinese bonds. This ETF can serve as a liquidity-focused building block for developed and emerging market bond investors looking to gain exposure to China’s sovereign bond market, either to diversify their portfolios or to express a view on the asset class.
Understanding the Importance of Index Selection
Chinese government bonds have enjoyed strong inflows as China has been included in more emerging market and global government bond indices. Standalone allocations to China bonds are also becoming increasingly common as investors seek to both enhance returns and reduce the volatility of their bond holdings via diversification. For those investors seeking to meet these goals through ETFs, understanding how indices differentiate themselves is important in being able to better understand how to integrate Chinese exposure into bond portfolios.
In a recent article, we compare four popular Chinese bond indices, looking at the key inclusion criteria, index characteristics and risk-return profiles.
* Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.
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