New Listing

JP Morgan AM unveils two China fixed income ETFs

ETFs will target the “untapped” onshore credit market

Theo Andrew


JP Morgan Asset Management (JPMAM) has expanded its range of China ETFs with the launch of two fixed income strategies, ETF Stream can reveal.

The JPM RMB Ultra-Short Income UCITS ETF (JCST) and the JPM BetaBuilders China Aggregate Bond UCITS ETF (JCAG) are both listed on the London Stock Exchange with total expense ratios (TERs) of 0.28% and 0.25%, respectively.

Actively managed, JCST will invest in a range of short-term investment grade government and corporate bonds with primary exposure to onshore and offshore yuan.

It will sit alongside JPMAM’s other ultra-short duration ETFs including the JPMorgan USD Ultra-Short Income UCITS ETF (JPST), the JPMorgan EUR Ultra-Short Income UCITS ETF (JEST) and the JPMorgan GBP Ultra-Short Income UCITS ETF (JGST).

JCAG will track the Bloomberg China Treasury + Policy Bank + Liquid IG Credit Issuers index, offering exposure to the country’s government and policy bank bonds alongside corporate bonds.

Ji Zhuang, APAC head of indices at Bloomberg, said China’s onshore credit market is still untapped by global investors.

He said: “As the first product tracking part of the Bloomberg Liquid China Credit Index, JCAG offers a new avenue to global investors to diversify their portfolios and seize opportunities in China's fixed income.”

Flows into China bonds have been turbulent in the first few months of 2022. The iShares China CNY Bond UCITS ETF (CNYB) raked in $1.1bn assets in January before recording outflows of roughly $750m over the past month, according to data from ETFLogic.

The Chinese government is currently going through a period of monetary policy easing, cutting mortgage lending benchmark rates in January and pushing up bond rates – while Europe and the US do the opposite – as contagion fears over its debt-ridden property sector continue.

Olivier Paquier, head of ETF distribution in EMEA at JPMAM, said: “China bonds’ low correlation to traditional developed market bonds offers investors a good source of diversification while the relatively high yield potential supported by China’s easing monetary policy makes it a relatively attractive income generator in a low-interest rate world.”

In February, JPMAM launched two actively-managed ETFs, the JPM China A Research Enhanced Index Equity ESG UCITS ETF (JREC) and the JPM AC Asia Pacific ex-Japan Research Enhanced Index equity ESG UCITS ETF (JREA).

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