iShares has launched the first European exchange-traded fund that provides exposure to global high yield bonds – the iShares Global High Yield Bond ETF.
As the search for income continues in the current low yield environment, high yield bonds continue to be of interest to investors willing to take on the extra corporate credit risk offered by sub investment grade issuers.
The launch marks the continued expansion of iShares’ European fixed income product range and complements the existing iShares Markit iBoxx Euro High Yield Bond and iShares Markit iBoxx $ High Yield Capped Bond ETFs.
The iShares Global High Yield Bond ETF provides exposure to sub-investment grade bonds issued by corporates, based in developed markets worldwide, in either USD, EUR, GBP or CAD.
It tracks the Markit iBoxx Global Developed Markets Liquid High Yield Capped Index, with bonds included in the index rated BB+ or less by at least one of three rating agencies: S&P, Fitch or Moody’s.
The fund will hold the constituent bonds physically and will be managed using a sampling technique providing investors with liquid exposure to the performance of the underlying index. To ensure diversification, a cap has been applied so that no single issuer accounts for more than three per cent of the fund.
Alex Claringbull, senior fixed income portfolio manager for BlackRock’s iShares fixed income range, says: “Many of our European clients are looking to diversify away from their local bond markets. This new iShares ETF offers global exposure in one low cost trade giving a diversification that is difficult to achieve elsewhere.
“Fixed income will remain a key focus for iShares in 2013 as we continue to cater to the evolving demands and needs of our clients.”