I've recently stumbled across this newly launched HK listed ETF from ishares. It invests in RMB denominated bonds, which are mostly issued by either the China Government or other affiliated issuers, along with a few corporate debt issuances.
There are currently around 80 components with an average life of around 3 years and a current yield to maturity of around 4.3%.
I like this ETF for a few reasons. Firstly, it offers a good yield, which is above most RMB savings account rates. It should also be relatively safe, with diversification across a number of issuances and predominantly being sovereign risk.
Two areas of uncertainty are (a) whether RMB will continue to appreciate against the USD (& HKD), and (b) how the unit values may be impacted by changes in interest rates.
Regarding the former, my personal view is that whilst there may be temporary moves up and down, over the long term i expect RMB to continue to appreciate as the chinese economy continues to grow at a healthy rate.
Regarding interest rate movements, part of the attraction of this ETF is that i don't think it will necessarily follow the widely expected decline in values anticipated in USD bonds. Given USD interest rates are effectively zero, they can only really go up, which should in theory reduce bond valuations. However, RMB interest rates are at more normalised levels, and may well go down if growth rates slow, increasing bond valuations.
Overall i'm comfortable with the risks and see this as a good addition to my income focused investment portfolio.
The unit purchase price was around HKD43.5