The improvement in access to China’s large bond market has started a conversation among global investors about the merits of allocating to Chinese bonds. Many institutional investors are considering whether to make an allocation and, if they do, what level of investment that should be. As of June 2021, Chinese bonds accounted for 7% of Global Aggregate Bond Indices and our analysis shows that an allocation beyond that level can offer significant diversification benefits to a global bond portfolio. We believe those diversification benefits will likely remain in place over the foreseeable future.
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