iShares, the exchange-traded funds platform of BlackRock, has expanded its European corporate bond suite with a new bond ETF focused on financial issuers.
The iShares Barclays Euro Corporate Bond Financials UCITS ETF complements iShares’ existing European corporate bond ETF suite and provides a way for investors to take a more targeted approach in their fixed income allocation.
European financials is the largest sector of the European investment grade universe, representing 47 per cent of the Barclays Euro-Aggregate: Corporates Index as of the end of April 2013. This new fund provides targeted and diversified exposure to this segment of the European investment grade corporate bond market in one simple trade, coupled with a potential yield pick-up beyond that achievable through an aggregated Euro corporate bond exposure. The Barclays Euro-Aggregate: Financial Index offers a yield of 2.06 per cent versus a 1.94 per cent yield from the Barclays Euro-Aggregate: Corporates Index.
Launched on the London Stock Exchange, the iShares Barclays Euro Corporate Bond Financials UCITS ETF provides exposure to fixed rate, investment grade bonds that are denominated in euros and issued by financial companies. The fund tracks the Barclays Euro-Aggregate: Financial Index by holding the physical bonds. It is managed using a sampling technique, providing investors with efficient and liquid exposure to the performance of the underlying index. The fund has a total expense ratio of 0.20 per cent. Barclays uses both issue and issuer ratings by three agencies – Moody’s Investors Service, Standard & Poor’s Ratings Group and Fitch Ratings – to determine the investment grade rating necessary for a bond to be included in the index.
With the new launch, iShares now offers 17 corporate bond ETFs, including the iShares Barclays Euro Corporate Bond 1-5 ETF, iShares Barclays Euro Corporate Bond ex-Financials 1-5 ETF and iShares Barclays Euro Corporate Bond Interest Rate Hedged ETF.
Stephen Cohen, head of investment strategy and insight EMEA at iShares, says: “Fixed income remains a core component of our ETF product range and we continue to innovate and evolve our product offering in this area. The new fund provides targeted exposure to this important segment of the bond market in a single trade. Investors can use this new iShares ETF in conjunction with existing iShares funds to express tactical views in their asset allocation.”