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Deutsche AWM launches China sovereign bond ETF

Deutsche Asset & Wealth Management has launched the first exchange-traded fund (ETF) on the European market to provide investors with exposure to China’s domestic sovereign bond market.


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The db x-trackers II Harvest CSI China Sovereign Bond UCITS ETF physically tracks the performance of an index of 35 onshore renminbi-denominated bonds issued by the Chinese government.

The yield-to-maturity for the underlying index is currently 3.38% with approximately five-year duration, compared with the comparable yield on five-year UK government bonds of 1.49%.

“China’s domestic sovereign bonds provide a high yield relative to equivalent sovereign bonds of countries with similar credit ratings, so we anticipate demand for this ETF should be high,” said Marco Montanari, Deutsche AWM’s head of passive investments, Asia-Pacific.

Harvest Global Investments is the investment manager of the new ETF, which has been listed on the Deutsche Börse. A London Stock Exchange listing is due to follow on July 20, 2015. The annual all-in fee for the fund will be 0.55%.

The launch of the Chinese bond ETF follows the January 2014 launch of the db x-trackers Harvest CSI300 Index UCITS ETF, which was Europe’s first physical replication ETF tracking China’s domestic CSI300 A-shares equity index.