KraneShares launches Chinese bond market ETF
Krane Funds Advisors (KraneShares), a global asset management firm known for its China-focused exchange-traded funds and innovative China investment strategies, has launched the KraneShares Bloomberg Barclays China Bond Inclusion UCITS ETF (LSE: KBND) on the London Stock Exchange.
KBND is benchmarked against the Bloomberg Barclays China Treasury and Policy Bank Capped Index, which is designed to track the performance of China's onshore renminbi (RMB)-denominated government and policy bank bond market. KBND will hold bonds issued by either China's Ministry of Finance or government-owned banks within China.
KBND offers investors access to the RMB-denominated securities being included in the Bloomberg Barclays Global Aggregate Index, an index with an estimated USD2.5 trillion in assets passively tracking or actively managed against it.1 In April 2019, Bloomberg began including Chinese RMB-denominated government and policy bank securities to the Bloomberg Barclays Global Aggregate Index, phased in over a 20 month period. The full inclusion is expected to attract around USD150 billion of fund inflows into China's USD13 trillion bond market.
"With attractive yields and low correlations relative to other government bond markets, China fixed income presents a compelling opportunity," says Jonathan Krane, CEO of KraneShares. "We're proud to partner with Bloomberg Barclays and Citigroup on KBND, which is an important fund marking a key milestone of the evolution of China's Fixed Income market for the asset management industry."
"Our goal at Bloomberg is to provide innovative solutions in indexing," says Steve Berkley, CEO of Bloomberg Index Services Limited (BISL). "The inclusion of RMB-denominated bonds in Bloomberg's fixed income indexes is a significant development for China's integration with global financial markets. We are excited to partner with KraneShares to make the Bloomberg Barclays China Treasury and Policy Bank Index investable through KBND."
Additionally, KraneShares has partnered with Citigroup to be the distributor for KBND. KraneShares' Capital Markets team will leverage Citi's bond connect capabilities to trade and source the underlying bonds for KBND.