Invesco Powershares filed paperwork with U.S. regulators to
market an Asian bond fund that would be focused on Chinese debt,
the latest move by a fund sponsor to slice and dice Asian bond
markets to vie for investor dollars
The PowerShares Asia Pacific Bond Portfolio filing comes just
days after WisdomTree took similar steps to market an actively
managed Chinese bond ETF. Also, San Francisco-based ETSpreads put a
Chinese bond fund into registration in May.
While there aren't any local-currency Chinese debt ETFs yet
available on the market, investor appetite for locally denominated,
emerging market, debt is growing. WisdomTree should know. Its
WisdomTree's Emerging Markets Local Debt Fund (NYSEArca:ELD) has
gathered more than $900 million in less than a year, and its Asian
counterpart, (NYSEArca:ALD), has hauled in almost $500 million
Van Eck's Market Vectors Emerging Markets Local Currency Bond
ETF (NYSEArca:EMLC) has also gathered more than $420 million in
less than a year, and is another example of growing investor
appetite for diversified exposure within the emerging markets.
The PowerShares fund will allocate most of its portfolio to
Chinese yuan-denominated bonds that have a fixed-coupon rate, a
minimum maturity of one year and a minimum size outstanding of 1
billion yuan, the filing said. The mix might consist of everything
from government to corporate to junk bonds.
The new ETF would join PowerShares' Emerging Markets Sovereign
Debt Portfolio (NYSEArca:PCY), though PCY is
The company didn't specify a ticker, fees or even which index it
will seek to replicate. But it did say it will do so through a
representative sampling strategy, meaning it won't own all the
securities in the fund's underlying index.
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