Invesco PowerShares unveiled its new ETF offering that will provide investors access to the yuan-denominated debt market.
According to PowerShares, the PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM) will begin trading on Friday, September 23. The fund will provide exposure to Chinese yuan-denominated “Dim Sum” bonds that are issued and settled outside of China and will issue monthly distributions.
DSUM has an expense ratio of 0.45%.
“The Dim Sum bond market offers attractive coupons, and the ability to participate in the appreciation potential of the yuan over time,” Ben Fulton, Invesco PowerShares managing director of global ETFs, commented. “We believe the PowerShares Chinese Yuan Dim Sum Bond Portfolio provides investors with both convenient, and low cost access to the yuan-denominated debt market.”
The Dim Sum bond market was first introduced in 2007 when the People’s Republic of China’s financial institutions were first allowed to issue yuan-denominated bonds offshore. The market has seen rapid growth, especially after its deregulation in July 2010.
The fund is subject to currency risk. The net asset value may drop if the yuan currency depreciates against the U.S. dollar. Additionally, if the renminbi, which is traded on the mainland, and the yuan, which is traded off-shore – also known as “CNH” in Hong Kong, diverge in value, the disparity between the currencies could negatively impact the ETF.
Max Chen contributed to this article.
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