Deutsche Asset & Wealth Management has launched the European market’s first China sovereign bond exchange-traded fund (ETF).

The db x-trackers II Harvest CSI China Sovereign Bond UCITS ETF, listed on the Deutsche Börse is the first on the European market to provide investors with exposure to China’s domestic sovereign bond market. A London listing is to follow on July 20 2015.

The ETF is a physical replication ETF that tracks the performance of an index of 35 onshore renminbi-denominated bonds issued by the Chinese government. 

The yield-to-maturity for the underlying index is currently 3.38% with approximately five-year duration. By comparison, the yield on five-year UK government bonds is 1.49%.

The ETF has an annual all-in fee of 0.55%. The investment manager of the ETF is Harvest Global Investments Limited.

“As China’s market develops and opens further to foreign investors, we will continue to be at the forefront of creating new products to provide investors with access to the world’s second-largest economy,” said Peng Wah Choy, CEO of Harvest Global Investments Limited.

China is currently rated AA- by Standard & Poor’s, Aa3 by Moody’s, and A+ by Fitch.

The launch of the ETF follows the January 2014 launch of the db x-trackers Harvest CSI300 Index UCITS ETF (DR), which was Europe’s first physical replication ETF tracking China’s domestic CSI300 A-shares equity index.