'The renminbi floodgates are very much open. Short term, medium and long term, people are interested in the renminbi story,' says Kenneth Ho, Julius Baer's head of products in Asia Pacific.

'Renminbi appreciation is at the top of everyone's list,' says Ho, who believes the currency could appreciate by 5 per cent before the end of the year.

Ho says the low yields seen on yuan investments, especially yuan bonds issued in Hong Kong (known as dim sum bonds), are a result of overwhelming demand for the instrument.

'Of the more than HK$450 billion held in renminbi, currently about 20 per cent is invested in bonds, which is up by about 10 per cent compared to last year,' Ho says. 'But with 80 per cent still sitting in deposit accounts earning little interest, there is a lot of money chasing very few bonds. That, in turn, is driving the price up and keeping the yields down.'

Andrew Fung, general manger and head of treasury and investment at Hang Seng Bank, says investors are generally attracted by yuan appreciation. He expects the currency to continue gaining strength over the next year.

Fung says that with the Hong Kong dollar pegged to the US dollar - and, therefore, paying very low interest rates - the yuan appreciation story will drive investors in search of decent returns into yuan products.

'We have seen the dim sum bond market expand extremely quickly, and would expect other products to receive the same type of welcome,' says Fung, who expects investment in the institutional bond market to top 100 million yuan.

The entry level for retail investors into authorised bond funds is HK$20,000, the same as the daily transferable amount into yuan by individuals. Fung says that instead of holding individual bonds, by investing in a bond fund investors would spread their risk by holding a basket of companies with household names such as Towngas, McDonald's and Caterpillar.

Anurag Mahesh, head of global investment services at Deutsche Bank Private Wealth Management, says buying offshore yuan and/or dim sum bonds is an option for investors looking for no-hassle exposure to the yuan.

Offshore yuan, which is most commonly traded in Hong Kong, is known as CNH. This is a conflation of the old yuan code of CNY and H, for Hong Kong.

'The CNH space is flush with cash at the moment, which is reflected in low interest rates,' Mahesh says. 'The feedback I get from our clients is they are looking at renminbi investments as a way of diversifying their asset allocation and looking to benefit from future gains through currency appreciation.'

Adam Tejpaul, head of investments for JP Morgan Private Bank in Asia, believes allocations to CNH are a good starting point for anyone looking to benefit from the appreciating currency.

'Liquidity today is somewhat limited, with most new issuance going to buy-and-hold investors. But as the secondary fixed-income market develops, as more new issuance comes to market, this is likely to improve significantly,' Tejpaul says.

Bryan Henning, head of global research and investments, Asia, for Barclays Wealth, says there's a lot of attention on yuan-related products in the market, but the speed of growth will be dictated by the availability of the underlying investments themselves.

Barclays Wealth, the global wealth management division of Barclays, recently announced the launch of yuan products for its private banking clients. This includes yuan deposits, deliverable spots and forwards, foreign exchange swaps, inward and outward remittances, and bonds.

'The main point for people to focus on is ensuring that they fully understand the nature of the product they are investing in,' Henning says. 'This will ensure that their expectations are matched by the reality of the product's actual payout mechanism.'

What are they?

Dim sum bonds are yuan bonds sold in Hong Kong. They are denominated in the new offshore yuan currency, known as CNH, which opens the bonds for investment to offshore investors. Dim sum bonds have attracted extraordinary demand from investors who want exposure to the yuan. The securities, therefore, come with low yields. Investors hope they will be fully compensated by currency appreciation.

Risk factor: varies with issuer

Returns: low to moderate