China’s Bond ETFs Top $50 Billion in Frenzy Spurred by Deflation

Chinese investors are snapping up exchange-traded funds tracking bonds, betting on their lower costs and diversified exposure to profit from an environment of stubborn deflation and policy support for the corporate sector.

Assets managed under such ETFs surged to more than $50 billion at the end of June, up from $10 billion at the beginning of last year, Bloomberg data show. The number of those targeting corporate notes has increased sixfold since the end of last year to become the fastest-growing segment, accounting for more than half of all bond ETFs.

The bond ETFs appeal to investors with cheaper ...