New Bond Mutual Fund Theme: A China Bond Fund For U.S. Investors

11-Jul-2011

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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From 247WallSt site, By JON C. OGG

U.S. investors are now getting a Renminbi (Yuan) and bond fund to invest in via an open-ended mutual fund structure.  An announcement has been made by Guinness Atkinson Asset Management that it is launching the Guinness Atkinson Renminbi Yuan & Bond Fund (GARBX).  The firm calls it the first open-end mutual fund structure that can offer U.S. investors direct access into the offshore Renminbi-denominated bond market.  Specifically, this open-end mutual fund will invest directly in bonds that are Renminbi-denominated bonds.

The announcement notes that Edmund Harriss is the fund manager and he is said to be a veteran China fund manager.  He has managed the Guinness Atkinson China & Hong Kong Fund (ICHKX) since 1998. The co-manager is listed as Tim Guinness.  The gafunds.com website shows that the target investments will include bonds and debt instruments from the Chinese government, corporate issuers within China, and multinational corporations.  The management team’s site shows that it funds are considered no-load funds.  The gross expense ratio is listed as 0.90% and no net expense fee is yet available because it has not had long enough to evaluate turnover, commissions and more.

What is interesting is that this will offer bond fund investors a direct link to be able to buy into China’s bond market and to participate in the projected upside of the Yuan or Renminbi in the future.  The current dollar-peg that has been so controversial has been said to artificially keep China’s currency valued much lower than if the nation were to instantly unravel that pegged trading band.  U.S. interest rates are extremely low and China is often called “The top creditor to the U.S.”

Oddly enough, the management company considers this an emerging market bond fund.  If China truly is the banker to the United States and if China is expected to lead the world in the size of its economy at some point around 2020, how long does it have to be an emerging market?  Maybe that makes the United States a de-merging economy.

Guinness Atkinson Renminbi Yuan & Bond Fund’s investment strategy will evaluate global macroeconomic issues and will use fundamental credit analysis to model screens in the credit analysis.  The fund will also use an active approach with flexibility in executing buy and sell decisions as market conditions change.

What is also interesting is that the fund noted that Caterpillar Inc. (NYSE: CAT), McDonald’s Corporation (NYSE: MCD), and also Unilever plc (NYSE: UL) have all issued bonds in RMB.  The fund merely used those as examples and the documents did not indicate that the fund will include those issues.

The Renminbi Yuan & Bond Fund (GARBX) fund’s prospectus is here.  Guinness Atkinson Asset Management, as of March 31, 2011, had approximately $600 million in total assets under management.

Some of the firm’s other funds listed are as follows:

  • Asia Focus Fund (IASMX)
  • Asia Pacific Dividend Fund (GAADX)
  • China & Hong Kong Fund (ICHKX)
  • Global Innovators Fund (IWIRX).

 

JON C. OGG
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