Van Eck Adds another China-Focused ETF

October 12, 2011 ( - New York-based asset manager Van Eck Global has launched Market Vectors Renminbi Bond ETF (NYSE Arca: CHLC), an exchange-traded fund (ETF), which offers investors exposure to Chinese renminbi (RMB)-denominated bonds, often referred to as “dim sum” bonds.

CHLC seeks to track, before fees and expenses, the price and yield performance of the Market Vectors Renminbi Bond Index (ticker: MVCHLC), an index designed to track the performance of RMB-denominated investment-grade bonds or unrated bonds from investment grade issuers in and outside of China.  

“Given China’s recent rapid economic growth, a market consensus has developed that the country’s currency is undervalued,” said Adam Phillips, Managing Director of ETFs at Van Eck Global, in a press release. “Yet investors have historically been somewhat limited in the ways by which they could get investment exposure to Chinese currency. With that in mind, we’re pleased to be launching this new ETF, which offers several advantages over Chinese currency funds that primarily use non-deliverable forward derivatives. CHLC will allow investors to gain exposure to high-quality RMB-denominated bonds, thereby providing the potential for investment income as well as currency appreciation, all through a transparent and cost efficient ETF.”   

Van Eck Global notes that investing in RMB-denominated bonds is not without risks, including currency, credit, and concentration risk, as well as risks associated with greater market volatility. Investments in securities of non-U.S. issuers also involves risks such as a lack of availability of financial information, higher transactional and custody costs, taxation by foreign governments, and more.   

CHLC, Van Eck’s 37th Market Vectors ETF, has a gross expense ratio of 0.50% and a net expense ratio of 0.39%, which is capped until May 1, 2013. According to the announcement, CHLC has the lowest net expense ratio of any U.S.-listed “dim sum” bond ETF currently on the market.  

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