iShares launches Asia’s first offshore RMB-denominated bond ETF
07 June 2013
News, Asia, Hong Kong
By Asia Asset Management
BlackRock announced on Thursday (June 6) that its iShares exchange traded funds (ETFs) business, the world’s largest manager of ETFs, is expanding its fixed income ETF product suite with the launch of Asia’s first offshore RMB-denominated bond ETF – the ‘iShares RMB Bond Index ETF’ in Hong Kong. The new ETF is designed to address the growing demand from investors for opportunities to tap into the rapidly developing offshore RMB (Dim Sum) bond market, while offering the benefits shared by iShares ETFs; including exchange-traded liquidity, provider stability and transparency.
The iShares RMB Bond Index ETF has been authorised by the Securities and Futures Commission of Hong Kong. It will be listed and commence trading on The Stock Exchange of Hong Kong on June 18.
The iShares RMB Bond Index ETF provides a new vehicle for local and international investors seeking to access the fast-growing RMB bond market, as it looks to replicate the market performance and deliver investment results that closely correspond to the performance of the Citi RMB Bond Capped Index. More importantly, investors are now able to overcome the hurdles of traditional Dim Sum bond investments by accessing a diversified basket of 92 RMB bonds in dual currencies, i.e. RMB and Hong Kong dollars, in one trade.
Jane Leung, managing director at BlackRock and head of iShares Asia Pacific said, “The listing of the Asia’s first offshore RMB bond ETF underscores our commitment, as a global leader in ETFs, to delivering innovative investment products that efficiently answer market needs. Inflows of fixed income exchange-traded products reached a record high of US$70.0 billion in the last year, whilst the size of the offshore RMB bond market increased nearly five times over the past two years to exceed 400 billion RMB (US$65.19 billion).
“The iShares RMB Bond Index ETF comes at a time when global and regional investors’ demand for both fixed income ETF and RMB bond investments is soaring. It complements the strong suite of fixed income ETFs offered by iShares globally, and allows investors to participate in the growth story of one of the world’s largest and most promising economies in an innovative, dual currency package.”
Julia Lee, director at BlackRock, head of Hong Kong retail and iShares distribution, said: “With the launch of the iShares RMB Bond Index ETF, investors are now offered a convenient solution to seize the enormous opportunities in the dim sum bond market in a disciplined, diversified and cost-effective manner, which is backed by the unparalleled global fixed income investment capability of iShares.”
The new iShares RMB Bond Index ETF will start trading in board lots of 100 units, which costs 3,500 RMB per lot at an initial issue price of 35 RMB.
The iShares RMB Bond Index ETF is a physically backed ETF which invests at least 70% in investment grade RMB bonds. It invests in bonds with a minimum size of at least 1 billion RMB and minimum maturity of one year. By allowing investors to gain exposure to 70 issuers across 18 countries and access the performance of 92 bonds in one easy trade, the new ETF provides risk diversification benefits amid the increasingly uncertain market environment.
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