iShares, the exchange-traded funds platform of BlackRock, has launched the first ETF in Europe to offer investors diversified exposure to global corporate bonds.
The iShares Global Corporate Bond ETF arrives at a time when demand for fixed income assets is soaring. Flows into fixed income ETFs have almost doubled in 2012, with USD50.8bn of net new assets recorded in the first eight months compared with USD28.5bn in the same period in 2011, according to BlackRock’s ETP Landscape research.
The new fund aims to track the Barclays Global Aggregate Corporate Bond Index, a broad-based measure of global investment-grade fixed-rate corporate debt markets, by trading across more than 7,000 high quality corporate bonds mainly from US (48 per cent), Europe (23 per cent) and Asia Pacific (10 per cent) and across 15 currencies. Rather than holding all bonds simultaneously, it will be sampled, with around 270 bonds at launch increasing to a typical holding of around 500 bonds.
Alex Claringbull, senior fixed income portfolio manager for BlackRock’s iShares fixed income range, says: “With clients continuing to search far and wide for yield in their portfolios, it means that more and more they need to consider allocating to global credit. This new ETF gives investors unparalleled access to the global corporate bond market in a single investment. The fund continues the expansion of our unrivalled range of corporate bond funds available and as a first in Europe, further reinforces our commitment to providing solutions to investors.”
The fund is physically-backed, holding the underlying bonds and securities, and has a total expense ratio of 20 basis points, or 0.2 per cent. On top of potential capital gains, the fund pays a dividend to investors twice a year.
