On July 17, Citi Investment News (Editor Yang Bin) announced that the scale of Chengtouetf has exceeded 10 billion yuan, becoming the fifth billion-yuan bond ETF. With the continuous bullish trend of the bond market this year, funds have continuously poured into bond ETFs, and the current scale of China's bond ETF has exceeded 110 billion yuan.

As of July 16, the scale of Chengtouetf issued by Haifutong Fund reached 10.059 billion yuan, becoming another bond ETF with a scale of over 10 billion yuan after HFT CSI Short-term Financing ETF, Political and Financial Bond ETF, Convertible Bond ETF, and Corporate Bond ETF. According to the fund contract, Chengtouetf is an index fund that uses a stratified sampling replication strategy to track the Shanghai Securities Chengtou Bond Index compiled and published by China Securities Index Co., Ltd. The sample of the index is composed of the credit bonds issued by the city investment platform with a credit rating of investment grade or above in the Shanghai market. It provides investors with an effective tool to invest in a basket of classified bonds. Chengtouetf pursues the minimization of tracking deviation and tracking error, and strives to ensure that the absolute value of the daily average tracking deviation between the net asset value growth rate of the fund and the yield rate of the Shanghai Securities Chengtou Bond Index does not exceed 0.25%, and the annualized tracking error does not exceed 3%.

According to the fund contract, Chengtouetf is an index fund that uses a stratified sampling replication strategy to track the Shanghai Securities Chengtou Bond Index compiled and published by China Securities Index Co., Ltd. The sample of the index is composed of the credit bonds issued by the city investment platform with a credit rating of investment grade or above in the Shanghai market. It provides investors with an effective tool to invest in a basket of classified bonds. Chengtouetf pursues the minimization of tracking deviation and tracking error, and strives to ensure that the absolute value of the daily average tracking deviation between the net asset value growth rate of the fund and the yield rate of the Shanghai Securities Chengtou Bond Index does not exceed 0.25%, and the annualized tracking error does not exceed 3%.

In the first half of 2024, the net asset value of Chengtouetf increased by 2.06%, and the Shanghai Securities Chengtou Bond Index rose by 3.57%. At the end of 2023, the scale of Chengtouetf was 2.916 billion yuan, an increase of 244% since the beginning of this year. Its on-exchange circulation shares increased from 0.289 billion to 0.977 billion.

On March 28 this year, after the launch of the National Bond 30 ETF issued by Bosera Fund, the number of bond ETFs listed in China reached 20. Currently, bond ETFs include 15 interest rate bond (treasury bond, policy financial bond, local government bond, policy financial bonds), 3 non-gold credit bond ETFs, and 2 convertible bond ETFs. At the end of 2023, the total scale of bond ETFs was over 80 billion yuan, and it has now exceeded 110 billion yuan.

Compared with off-exchange bond index products, bond ETFs have better liquidity, convenient trading, high transparency, and low cost, and stronger product tool attributes, which are favored by the market. Coupled with the continuous bullish trend of the bond market this year, funds have continuously poured into bond ETFs.

Huabao Securities analyst Sun Shuna believes that the capital trend of bond ETFs is highly correlated with the bond market in the short term. In the first quarter of 2024, the long-term bond yield rapidly declined, and the scale of long-duration bond ETFs expanded. Since the second quarter, the bond market has become more volatile, and long-term interest rate bond ETFs no longer attract funds frantically. Instead, funds turned to credit bond strategies to obtain thicker ticket interest income in the shaking market.

Yang Yewei, chief of fixed income at Guosen Securities, also pointed out that the growth rate of the bond ETF market scale and its market performance are in a synchronous or slightly lagging correlation. That is, in the market stage where bond bulls and bond ETFs perform strongly, bond ETFs are more likely to increase their volume.

In the first half of the year, the Wind Mid- and Long-Term Pure Bond Fund Index rose by 2.38%, the Wind Short-Term Pure Bond Fund Index rose by 1.74%, and the median net asset value growth rate of the above bond ETFs was 2.23%. Compared with actively managed funds, the returns of bond ETFs in the first half of the year are not inferior.

A fund manager introduced that compared with active bond investments, bond ETFs can provide ordinary investors with long-term, stable, and predictable returns. However, institutions pay more attention to its tool attributes when allocating bond ETFs. In addition to diversified investment in bonds, bond ETFs can also be used for pledge-style repurchase, and support on-exchange T+0 transaction composition.

Yang Yewei believes that referring to the international experience of the development of bond ETFs, the concentration of mature bond ETF markets is relatively high, and the investment structure of investors is mainly investment advisers, while in China, self-employed institutions such as insurance, brokerage, and banks are the main investors. There is still room for further enrichment of the product structure of China's onshore bond ETF market, and comprehensive and credit bond ETFs account for a higher proportion in some mature bond ETF markets.