Unleash the potential of China bonds BlackRock China Bond Fund

Unleash the potential of China bonds

  • IMPORTANT:

    IMPORTANT INFORMATION:

    i. The China Bond Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in fixed income transferable securities denominated in Renminbi or other non-Chinese domestic currencies issued by entities exercising the predominant part of their economic activity in the PRC through recognised mechanisms including but not limited to the Chinese Interbank Bond Market, the exchange bond market, quota system and/or through onshore or offshore issuances and/or any future developed channels. The Fund is a RQFII Access Fund and a CIBM Fund and may invest without limit in the PRC via RQFII Quota and in the CIBM via the Foreign Access Regime and/or Bond Connect and/or other means as may be permitted by the relevant regulations from time to time.

    IMPORTANT:

    i. The China Bond Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in fixed income transferable securities denominated in Renminbi or other non-Chinese domestic currencies issued by entities exercising the predominant part of their economic activity in the PRC through recognised mechanisms including but not limited to the Chinese Interbank Bond Market, the exchange bond market, quota system and/or through onshore or offshore issuances and/or any future developed channels. The Fund is a RQFII Access Fund and a CIBM Fund and may invest without limit in the PRC via RQFII Quota and in the CIBM via the Foreign Access Regime and/or Bond Connect and/or other means as may be permitted by the relevant regulations from time to time.

    ii. The Fund may invest in debt securities that are subject to actual or perceived ratings downgrade. An increase in interest rates may adversely affect the value of the bonds held by the Fund. The Fund may invest in non-investment grade and unrated bonds that may be subject to higher default, volatility and liquidity risks. The Fund invests in bonds issued or guaranteed by governments or authorities, which may involve political, economic, default or other risks. The Fund may invest in urban investment bonds issued by Chinese local government financing vehicles (“LGFVs”) that are subject to default risk of the LGFVs.

    iii. The Fund is subject to restrictions and requirements applicable to the Renminbi Qualified Foreign Institutional Investor (“RQFII”) investments, which may adversely affect the fund’s value due to regulatory uncertainties. The Fund is subject to risks associated with investment in the China Interbank Bond Market.

    iv. The Fund's investments are concentrated in People’s Republic of China (PRC). This may result in greater volatility than more broad-based investments. The Fund invests in certain emerging markets and may be subject to political, tax, economic, social and foreign exchange risks.

    v. The Fund is subject to PRC tax risks, currency risks, securities lending counterparty risks, foreign investments restrictions risks, currency control/ conversion risks and currency hedging risk.

    vi. Class 6 Shares pay dividends gross of expenses and/or from capital at the Directors’ discretion. Class 8 Shares pay dividends gross of expenses and/or from capital at the Directors’ discretion and include interest rate differentials arising from share class currency hedging. Negative interest rate differentials may decrease the dividends paid. Paying dividends gross of expenses may result in more income being available for distribution; however these shares may effectively pay dividends from capital – may amount to a partial return or withdrawal of an investor’s original investment or capital gains. All declared dividends result in an immediate reduction in the NAV price of the share class on the ex-dividend date.

    vii. The Fund may use derivatives for hedging and for investment purposes. However, usage for investment purposes will not be extensive. The Fund may suffer losses from its derivatives usage.

    viii. The value of the Fund can be volatile and can go down substantially within a short period of time. It is possible that a certain amount of your investment could be lost.

    ix. Investors should not make investment decisions based on this document alone. Investors should refer to the Prospectus and Key Facts Statement for details including risk factors.

China Bond Market 2022 Midyear Outlook

Yii Hui Wong, Portfolio Manager, China Fixed Income, BlackRock

As China gradually opens up from lockdowns, we expect investor sentiment to turn more positive in the second half. 

China credit remains our top pick, especially onshore CNY credit.

It serves as an effective diversifier in a global portfolio and has benefited from the country’s stable inflation levels and supportive policies.

Given low inflation in China, ambitious growth targets and supportive statements made by multiple top authorities, we think monetary policy will remain accommodative.

Investors benefits from 2 layers of diversification when investing in China bonds.

Firstly, CNY credit has seen positive performance and outperformed other key global asset classes across recent periods of major global market shocks. It has proven to be a powerful tool to build resilience in a global portfolio.

Secondly, the low correlation between onshore CNY and offshore China USD credit market allows us to reduce portfolio volatilities and generate alpha through dynamic asset allocation.

China continues to offer attractive yields at low duration.

Our ability to dynamically invest across onshore and offshore credits allow us to capture dislocation opportunities to maximize yields without introducing extra credit risks.

Seek to capture yield & growth opportunities in the China bond market

The rise of China’s bond market to become the world’s second largest1 has been driven primarily by local investors. The next stage of its growth should see increased foreign ownership with ongoing inflows to the market as Chinese securities are increasingly represented in flagship global bond benchmarks.

With increased acceptance of China bonds as a building block for global fixed income portfolios, investors are now actively allocating funds to China. The growth of the China bond market, in size and complexity, is providing a wealth of opportunities for investors.

$20
trillion in market size1
2
Second largest in the world1
16%
Annualized growth rate2
3%
Foreign ownership2

What makes China bonds a compelling asset class?

Amidst an environment of elevated volatility and geopolitical risk, China bonds continue to offer better risk-adjusted yields. It serves as an effective diversifier and is a powerful tool to build resilience in a global fixed income portfolio.
Fee tag icon
Better risk-adjusted yield
China credits offer relatively attractive yield per unit of volatility3 versus other major fixed income asset classes.
Protect shield icon
Onshore China credit is resilient against market shocks4
Onshore China credit has seen positive returns during major global market shocks. Its low correlation against other asset classes can provide resilience in a global portfolio.
Choice arrows icon
Low correlation between onshore and offshore markets5
Onshore & offshore China bond markets have low correlation and can enable investors to diversify, reduce portfolio volatility & generate alpha via dynamic asset allocation.

Why invest in BlackRock China Bond Fund:

Attractive income: 5.5% p.a. (A6 RMB)
Latest annualized yield as of 29 July 2022. A6 share class aims to pay a dividend on a monthly basis. Dividend Payment is not guaranteed, and is not indicative of the return of the Fund. The Fund may effectively pay dividend from capital. See important information vi)6
5.5% p.a. (A6 RMB share class as of 29 January 2021)

Latest 6 months dividend table – A6 RMB

Month Annualized Yield
6/30/2022 5.51%
5/31/2022 5.46%
4/28/2022 5.46%
3/31/2022 5.47%
2/28/2022 5.39%
1/27/2022 5.30%

A6 share class annualized yield = (Dividend rate / ex- date NAV) * (12*100). Dividend yield is not guaranteed, and is not indicative of the return of the Fund. Past performance is not a guide to future performance. Investors may not get back the full amount invested. A6 share class inception date: 11-Jul-2018.

Ratio percent icon
Strong Performance7
Ranked 1st quartile among its peers over 5-year period
direction icon
A “go-anywhere” strategy
Have the flexibility to invest across onshore and offshore CNY and USD China credit market to capture income and growth opportunities

Our recent accolades

We have won a number of awards in recognition of our excellence in the China bond capability.8

Asian private banker award logo / 2022 Refinitiv Lipper award logo

Think diversification, think China bonds
China bonds can be used as building block to create a diversified fixed income solution that optimises yield while managing volatility.
Candies in different colours

To find out more, speak to your financial advisors.

You don’t have to look far to find the income you need.