What are the key differences between investing RMB bond ETF and renminbi bonds?--> April 8, 2021

Bond vs. Bond ETF

Investing and holding directly renminbi bonds will receive regular coupon payments. In contrast, investing RMB bond ETF may not recieve any regular distributions, particularly if the underlying bond index is a total return index. There may not be any guarantee on the rate or frequency of distribution by RMB bond ETFs. The fund manager of RMB bond ETF has the final decision on paying distributions out of net income, out of capital or effectively out of capital. Attention must be paid to the offering document of the fund for details such as the risk factors associated with different distribution policies. Any distribution yield of an RMB bond ETF may be usually lower than the yield of the underlying portfolio of renminbi bonds, as the are deductions arising from fees, charges and other expenses of running the ETF.

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