Surprise, You Own Chinese Bonds!

Imagine your financial adviser selling you a bond fund that you thought was invested in low risk index or municipal securities only to find out that much of your holdings are in high-risk Chinese or Puerto Rico bonds. Unfortunately, that is the situation facing investors who may have unwittingly bought bond funds without realizing they held a large percentage of Chinese bonds, according to a recent Wall Street Journal article. “From April 1 onward, many investors will start to own Chinese bonds for the first time, making them creditors to the government in Beijing and the state-owned policy banks,” the Journal recently reported. “That’s because China has been admitted to the Bloomberg Barclay’s Global Aggregate Index, which began its life as the Lehman Aggregate Bond Index.  It will give many debt investors their first direct exposure to the labyrinthine Chinese market.” “Labyrinthine” is not the type of word most Mom and Pop…

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