Cathay BBB Corporate Bond ex China 10 Years Plus ETF (00725B)

Overview

The Cathay BBB Corporate Bond ex China 10 Years Plus ETF, managed by Cathay Securities Investment Trust Co., Ltd., is a fixed income exchange-traded fund (ETF) established in 2018. It is meticulously designed to provide investors with exposure to a diversified portfolio of U.S. dollar-denominated corporate bonds. These bonds are rated BBB and have maturities exceeding ten years. A distinctive feature of this ETF is its explicit exclusion of issuers from China, aiming to cater to investors seeking stable income and long-duration credit exposure outside the Chinese market. The fund employs a passive investment strategy to track the Bloomberg 10+ Year BBB USD Yield Corporate Bonds (excluding China) Index. Through holding the underlying securities in proportions similar to those of the index, the ETF strives to closely replicate its performance. Furthermore, the fund implements a sector approach with a 20% cap to mitigate concentration risk, ensuring a diversified investment portfolio that spans various sectors.

Products and Services

• Portfolio of U.S. Dollar-Denominated Corporate Bonds

The core product of the Cathay BBB Corporate Bond ex China 10 Years Plus ETF is its diversified portfolio consisting of U.S. dollar-denominated corporate bonds rated BBB. These bonds have maturities of more than ten years, offering investors the opportunity for stable income over the long term. The explicit exclusion of issuers from China allows the fund to provide a unique investment opportunity for those looking to diversify their income sources and reduce exposure to the Chinese market.

• Passive Tracking of the Bloomberg 10+ Year BBB USD Yield Corporate Bonds (excluding China) Index

This ETF employs a passive investment approach to track the performance of the Bloomberg 10+ Year BBB USD Yield Corporate Bonds (excluding China) Index. By holding the underlying securities in similar proportions to the index, the fund aims to closely replicate its performance. This strategy provides investors with an efficient and transparent way to gain exposure to the specified market segment, leveraging the expertise of Bloomberg's indexing capabilities.

• Sector Approach with a 20% Cap

To mitigate concentration risk and ensure a balanced exposure across various sectors, the Cathay BBB Corporate Bond ex China 10 Years Plus ETF employs a sector approach with a 20% cap. This strategy prevents any single sector from dominating the fund's portfolio, promoting a balanced and diversified investment portfolio that is designed to manage risk while capturing opportunities across a broad range of industries.

• Quarterly Income Distribution

One of the attractive features of this ETF is its distribution of income on a quarterly basis. Investors looking for regular income will find this feature particularly beneficial, as it provides them with a steady flow of cash returns. The relatively high indicated dividend yield, supported by the long maturity and credit profile of its constituent bonds, makes this ETF an appealing option for income-focused investors.

• Notable Holdings

The ETF's holdings regularly feature prominent global corporations such as Boeing, CVS Health, and Oracle. These holdings underscore the fund's broad sector reach within investment-grade issuers, reflecting a well-thought-out selection process that aims to balance risk and return. Investors in the fund benefit from exposure to leading companies with strong corporate profiles, contributing to the overall performance and stability of the ETF.