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BlackRock adds two long-dated sovereign bond ETFs to fixed income range


BlackRock has expanded its range of over 80 fixed income ETFs with two funds that purchase long-dated sovereign bonds with maturities of 15 years or more. 

The funds build out iShares’ suite of over 35 government bond funds and allow investors to be more precise with their sovereign exposure by targeting specific durations.
The iShares $ Treasury Bond 20+ Yr UCITS ETF invests in fixed rate US Dollar denominated bonds that are issued by the US Treasury and have an outstanding maturity of at least 20 years. It becomes one of the longest duration US treasury ETFs in iShares’ European range. The fund has a total expense ratio of 0.20%.
The iShares Euro Government Bond 20yr Target Duration UCITS ETF purchases bonds rated AA- or better that have been issued by a central government of members of the Eurozone, and are denominated in euros or in a pre-euro currency. It aims to achieve a constant duration of approximately 20 years and a cap is applied so that no single bond accounts for more than 30%. The fund has a total expense ratio of 0.15%.
Both ETFs are physically backed and purchase the underlying bonds.
Brett Olson, Head of iShares Fixed Income EMEA for BlackRock, says: “One of the dominant trends of the last five years has been investors diversifying their fixed income allocations. Our clients are looking for ways to express specific views on countries, asset classes and duration risk amongst other features. We’ve expanded our range as a result, and today’s funds provide an additional way to add long-dated Euro and Treasury bonds to a portfolio, something that liability-driven investors such as DB plan managers may find particularly attractive.
“Fixed income ETFs offer access to a diversified range of bonds in a single, cost-efficient trade and are one of the industry’s major growth areas. They attracted global net new flows of $84.5bn* in 2014, a new record, and we expect this growth will continue in 2015.”

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