State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), today launches the SPDR Bloomberg Barclays China Treasury Bond UCITS ETF. The fund primarily invests in Treasury bonds issued by the Chinese government and offers more convexity compared with other broader Chinese bond indices.
With an emphasis on liquidity, the index tracked by the SPDR Bloomberg Barclays China Treasury Bond UCITS ETF focuses on bonds with a minimum outstanding amount of CNY 100 billion (or c. more than $15 billion) from one year and above of remaining maturity. Larger issues are generally more liquid and easily traded. This size screen also removes some of the longer-dated, older bonds to ensure further liquidity.
China’s bond market has grown significantly and become the second-largest bond market globally.* As Chinese government bonds continue their journey into global government bond indices, investors need new tools to access them transparently in a cost-efficient way. The fund is liquidity-focused, serving as a building block for developed and emerging market bond investors who want to diversify, and as a means of gaining exposure to China’s sovereign bond market.
”Chinese bonds look attractive when compared across global bond markets as they can be lower in volatility and provide a yield pick-up of close to 195bps versus a global treasury exposure.** The average duration is also shorter relative to US, European, Japanese and sterling treasury bond indices. The ETF is designed as a cost-efficient tool and can be used as a core building block for benchmark-aware investors allocating to treasury exposures more tactically.”
Kheng-Siang Ng, Asia Pacific Head of Fixed Income at State Street Global Advisors
