UBS Asset Management has launched an ETF which will allow investors to invest directly in the Chinese onshore market, offering exposure to government and policy bank bonds.
The UBS ETF - J.P. Morgan CNY China Government 1-10 Year Bond UCITS ETF will provide direct access to renminbi-denominated bonds through listings on the Deutsche Börse, the SIX Swiss Exchange and the Borsa Italiana, and comes with a total expense ratio of 0.33%.
It will track the J.P. Morgan China Government + Policy Bank 20% Capped 1-10 Year index, which excludes bonds with a residual term of more than ten years allowing greater liquidity without having "a significant effect on overall returns".
Exposure to the China Development Bank, the Agricultural Development Bank of China and the Export-Import Bank of China, the country's three policy banks, will be capped at 20% each.
Andrew Walsh, head of UBS passive and ETF specialist sales, UK and Ireland at UBS Asset Management, said: "Even though it is the second largest economy in the world, with a comparably low level of debt, China is still under-represented in global indices.
"Given the country's relevance, we believe investors should consider China-specific allocation and, in the local market, government bonds and policy bank bonds are some of the strongest, largest and most-liquid assets."