iShares, the exchange traded funds platform of BlackRock, has launched the iShares Global High Yield Corp Bond GBP Hedged UCITS ETF and the iShares Global Corporate Bond EUR Hedged UCITS ETF.
These two currency-hedged fixed income funds, the first of their type from iShares, are a result of the continued development of the iShares fixed income range. Driven by investor appetite, the new funds aim to reduce the impact currency fluctuations can have on returns when investing in fixed income globally.
The two physically-replicating iShares funds, listed on the London Stock Exchange, allow investors to access global bond exposures whilst reducing the risk of currency fluctuations in a single trade. When investing internationally, investors are exposed to two main risks: movement in the value of the underlying asset and fluctuation between their portfolio base currency and the currency in which assets are denominated. This currency exposure can introduce unintended risk into a portfolio especially during periods of increased currency volatility. Hedging currency exposure allows investors to separate and manage these risks effectively.
Stephen Cohen, head of investment strategy at iShares EMEA, says: “We’re seeing a long-term trend for investors to diversify their fixed income allocations globally whilst at the same time there’s also been heightened volatility in FX markets. These factors are creating demand for simple and effective currency hedged solutions and we’ve designed these new funds with this client need in mind.
“The funds are our first currency hedged bond ETFs in Europe and build on our existing range of European currency hedged equity ETFs. They enable investors to hedge the currency of their investment returns in a single transaction without having to monitor and maintain a separate currency hedge – ideal for those who do not have hedging capabilities in-house.”
The iShares Global High Yield Corp Bond GBP Hedged UCITS ETF has a total expense ratio of 0.55 per cent and the iShares Global Corporate Bond EUR Hedged UCITS ETF has a total expense ratio of 0.25 per cent. Both funds follow a static monthly hedging index methodology.
