The SPDR Citi Asia Local Government Bond ETF will use the Citi Asia Government Bond Investable Index as its benchmark and will invest in domestic sovereign bonds.
Countries included in the index are: China, through its offshore (CNH) market, Hong Kong, Korea, Indonesia, Malaysia, Thailand, Singapore and the Philippines.
The weighting of China in the index reflects the fact its offshore ‘Dim Sum’ bond market is fairly new and therefore relatively small, SPDR said. But as it grows and so becomes more liquid and investable, the weighting of China in the fund will increase.
The index is compiled of local currency bonds and it combines developed and emerging Asian sovereign deb, with a weighting of approximately 17% developed and 83% emerging countries.
A 20% country cap is also in place to ensure the diversification of the index and the fund will be managed by SPDR’s specialist fixed income team in Singapore.
