The Fund will provide access to Chinese yuan-denominated “Dim Sum” bonds issued and settled outside mainland China. DSUM will have an expense ratio of 0.45% and is expected to issue monthly distributions.
“The Dim Sum bond market offers attractive coupons, and the ability to participate in the appreciation potential of the yuan over time,” said Ben Fulton, Invesco PowerShares Managing Director of Global ETFs.
The Dim Sum bond market was introduced in 2007 when the People’s Republic of China-incorporated financial institutions were first allowed to issue yuan-denominated bonds offshore. Since then, the market for Dim Sum bonds has seen significant growth, particularly since its deregulation in July 2010. Dim Sum bonds are generally issued in Hong Kong by governments, agencies, supranationals, and corporations.
The PowerShares Chinese Yuan Dim Sum Bond Portfolio is based on the Citigroup Dim Sum (Offshore CNY) Bond Index. The Fund will normally invest at least 90% of its total assets in Chinese yuan-denominated bonds that comprise the Index. The Index measures the performance of Chinese yuan-denominated “Dim Sum” bonds that are issued and settled outside of Mainland China. The Index includes fixed-rate securities issued by governments, agencies, supranationals and corporations that have a minimum maturity of one year and a minimum size outstanding of 1 billion yuan. The index is managed by Citigroup Index LLC and is reconstituted on a monthly basis.