Industry Updates

BlackRock China government bond ETF hits $1bn four months after launch

ETF launched in April with $212m in assets under management

Theo Andrew

a city skyline at night

BlackRock’s China government bond ETF has hit $1bn assets under management (AUM) just four months after launch.

The iShares China CNY Govt Bond UCITS ETF (CGBI) has seen assets swell from $211.9m on inception to just over $1bn AUM, as at 10 September, as investors flock to Chinese bonds.

CGBI listed on the Euronext Amsterdam on 26 April with a total expense ratio of (TER) 0.25%. It tracks the performance of the FTSE Chinese Government Bond Index which offers exposure to 24 bonds issued by the Chinese government.

The flows are representative of the wider inflows into Chinese government bonds which hit a record high for the fifth straight month in August, according to data from the interbank bond market depository China Depository & Clearing Co (CDCC). It comes at an uncertain time for Chinese equities as the government seeks greater control of its listed stocks.

Overseas investors held roughly $340.8bn in government bonds at the end of the month, a 0.8% rise in July, the CDCC data said. 

Commenting on the flows, Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence, said China bonds are one of a few areas of the market where investors can find decent income at the moment.

“It really seems like a yield play to me, rates are so slow now on European and US bonds, China actually offers some decent income,” he said.

Todd Rosenbluth, head of ETF and mutual fund research at CFRA, added: “Global investors are increasingly investing in an ETF early in its lifecycle rather than waiting the traditional three years as they typically do with a mutual fund. However, crossing $1bn in assets so soon is impressive.

“Fixed income ETF investors are being more tactical in 2021 focused on more narrowly focused segments and geographies and not just broad market offerings.”

BlackRock’s other China government bond, the iShares China CNY Bond UCITS ETF (CNYB), has been one of the firms most successful launches over the past few years, gathering $12.7bn in AUM since coming to market in July 2019.