Van Eck Plans ‘Dim Sum’ Bond ETF

July 28, 2011

Van Eck joins the China bond-fund fray with an ETF that has a catchy name.

Van Eck Global, the New York-based money management firm known for its commodities investment strategies, filed paperwork with the Securities and Exchange Commission to market what it calls a “Dim Sum” ETF that will own debt denominated in yuan but issued outside of mainland China.

That effectively means the Market Vectors Dim Sum Bond ETF will mostly own paper that’s issued in Hong Kong. Specifically, the filing said the fund will own bonds from Chinese or non-Chinese issuers outside of the mainland, including companies, governments and so-called supranational agencies.

Van Eck’s move follows a flurry of filing activity this month and this year by companies looking to market bond ETFs focused on China. Those companies include Invesco PowerShares, WisdomTree, ETSpreads as well as Guggenheim Funds. The trend began with funds focused on emerging markets debt denominated in local currencies as investors looked to play high-growth economies in a new way.

The WisdomTree Emerging Markets Local Debt Fund (NYSEArca: ELD), the most successful of all these new local debt funds, has gathered more than $1 billion in less than a year. Van Eck’s Market Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC) has meanwhile attracted more than $500 million since its launch about a year ago.

In March of this year, the WisdomTree Asia Local Debt Fund (NYSEArca: ALD) came to market, and it too has gathered more than $500 million, but in just four short months.

Much of the filing activity focused on China bond ETFs emerged after it became clear that WisdomTree’s ALD was having success gathering assets.

Van Eck didn’t say in the filing detailing its planned Dim Sum Bond ETF what symbol it would trade under or what its annual expense ratio would be.

 

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