The new fund, called the RMB Income Plus Portfolio, is a Ucits-compliant open-ended investment company with variable capital. It is able to buy renminbi bonds issued outside China and other Asian bonds excluding Japan and will seek to maintain currency exposure almost entirely with the renminbi.
Hayden Briscoe, who is managing the fund at AllianceBernstein, said the currency had appreciated by about 20% since 2005 and he expected the growth trend to continue.
“With China’s growth rate this year expected to be about 9% – well over double that of the world as a whole – we think there is scope for the renminbi to strengthen further,” he said.
“The portfolio is constructed with exposure to Asian bonds to seek higher income and enhance total return, which investors are likely to value in the current low interest-rate environment. This will also provide enhanced diversification for investors, while the portfolio can flexibly rotate into the offshore renminbi new-issue market when yields become attractive,” he added.
Investor support for the offshore renminbi bond market has been strong recently, reflected in the fact that issuance nearly tripled last year to RMB41bn.