Chinese Debt: Finding a Home in Global Bond Portfolios

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:

  • Balancing risk and return in China’s fixed income market
  • Reasons to consider Chinese debt
  • Differences between managing Chinese debt versus other Asian debt
  • The experience of State Street Global Advisors in this asset class
  • The future of Chinese debt

Read the Q&A

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.

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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.

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