HSBC Global Asset Management has launched a passive index fund offering exposure to China’s domestic government bond market.

The HSBC China government Local Bond Index fund (HSCGS1Q) is domiciled in Ireland under HSBC’s ICAV platform and has a management fee of 0.25%.

The fund tracks the performance of the Bloomberg Barclays China Treasury and Policy Bank 9% Capped Bond index.

HSBC believes this asset class is less impacted by global risk sentiment and therefore, offers a diversification benefit while global yields are at an all-time low.

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Sebastien Faucher, head of passive fixed income at HSBC GAM, commented: “With global yields at historically low levels, investing in China onshore bonds can offer investors the yield premiums they are searching for.

“As China opens up its bond market to overseas investors, foreign ownership in its onshore government bonds and policy bank bonds has picked up to around 8% and 3% respectively and is expected to rise further in the coming months.”

The firm also recently launched the HSBC Global Emerging Market Government Bond Index fund, making it the second fixed income product released in a month.