The first Ucits money market exchange-traded fund (ETF) with a renminbi quota has been launched in the London Stock Exchange.
Germany’s Commerzbank and an asset management arm of China Construction Bank, CCB International Asset Management, have made the product available to investors in Germany and Luxembourg, as well as to UK-based investors.
The CBK CCBI RQFII Money Market Ucits ETF, as it is called, can be traded and settled in renminbi, sterling and euros outside of Asia.
The ETF provides European investors with access to renminbi-denominated government, policy bank and corporate bonds with a weighted maturity of no more than six months and an AAA Long- term rating or A-1 short- term rating by the local rating agency.
The RQFII, or Renminbi Qualified Foreign Institutional Investor, quota allows investors to move offshore renminbi in and out of China’s mainland money markets.
When backtested over the past five years, the Chinese money markets returned an average of more than 4% a year before fees and taxes, says Commerzbank.
HSBC is the fund’s custodian.
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