Fixed-Income ETFs: Just Starting
China has a large Treasury market, a growing muni and credit market, yet there are only three U.S.-listed Chinese fixed-income ETF products. The PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM) is the largest, with only $50 million in assets under management. The KraneShares E Fund China Commercial Paper ETF (KCNY) invests in investment-grade commercial papers in domestic market. VanEck sought AMC as its partner in managing the VanEck Vectors ChinaAMC China Bond ETF (CBON), investing in RMB-denominated bonds.
Appendix I. US-Listed Chinese Equity ETFs
Source: Bloomberg 10/11/2016
The demand for Chinese fixed-income ETFs is probably underserved, and none of the large ETF insurers are currently in this space, leaving the door wide open for other issuers.