JP Morgan Asset Management has expanded its ‘BetaBuilders’ suite of low-cost, passively managed funds with the launch of Europe’s first China aggregate bond ETF.
The fund is the first ETF in Europe to provide Chinese aggregate bond exposure.
The JPM BetaBuilders China Aggregate Bond UCITS ETF has been listed on London Stock Exchange in US dollars (Ticker: JCHA LN) and pound sterling (JCAP LN), on SIX Swiss Exchange in US dollars (JCHA SW), and on Xetra (JCHA GY) and Borsa Italiana (JCHA IM) in euros.
The ETF has come to market with $50 million in assets.
The fund is linked to the Bloomberg China Treasury + Policy Bank + Liquid IG Credit Issuers Index which consists of fixed-rate, investment-grade debt issued on China’s Interbank Bond Market by the Chinese government, policy banks, and corporate issuers.
Eligible issues must be denominated in Chinese renminbi and have minimum amounts outstanding of CNY 5 billion for Treasury and policy bank bonds and CNY 1.5bn for corporate debt. The index includes securities with at least one year remaining to maturity.
Additionally, to promote investability, the liquidity of corporate credit issuers is assessed on a quarterly basis and only those bonds with three-month average trading volumes above CNY 500 million are selected for inclusion.
The ETF comes with an expense ratio of 0.25%. Income is accumulated within the portfolio.
Existing Chinese fixed income ETFs listed in Europe tend to focus solely on Chinese Treasury securities or a combination of Treasuries and policy bank bonds. The largest of these ETFs is the $12bn iShares China CNY Bond UCITS ETF (CNYB LN) which comes with an expense ratio of 0.35%, while the cheapest is the $40m SPDR Bloomberg Barclays China Treasury Bond UCITS ETF (CHNT LN) which costs 0.19%.