Chinese Bonds: Enhancing a European Fixed Income Portfolio

Improved access for foreign investors to China’s large bond market has started a conversation around the place of Chinese bonds within a global portfolio. Investors are now evaluating whether to make an allocation and, if they do, what level of investment that should be. In the current low yield environment, Chinese bonds represent an attractive yield pick-up opportunity while also offering good diversification benefits,* particularly for Europe-based investors. The ultra-low or even negative yields on offer in Europe and the low correlation of Chinese bonds to European bond returns are key factors in the decision mix.