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BlackRock expands iShares fixed income ETF offerings


BlackRock has expanded its range of iShares fixed income exchange traded funds (ETFs) with the launch of four new smart beta and environmental, social and corporate governance (ESG) ETFs.

BlackRock is launching two new fixed income smart beta funds, the iShares Edge Investment Grade Enhanced Bond ETF (IGEB) and the iShares Edge High Yield Defensive Bond ETF (HYDB), offering discrete exposure to investment grade and high yield corporate credit markets, respectively. Both ETFs take a smart beta approach to corporate bond investing, blending two rewarded and diversifying fixed income factors — quality and value — that seeks to mitigate risk while providing enhanced returns. HYDB seeks to be more defensive overall than the broad high yield corporate market and IGEB offers the potential for a higher yield than the broad investment grade corporate market.
The launch of IGEB and HYDB also represents the introduction of BlackRock’s first self- indexed funds. These new indexes are based on unique intellectual property and leverage BlackRock’s analytics and modeling capabilities. BlackRock plans to utilize self-indexing strategies in the future in areas where the firm’s leading intellectual property and longstanding fixed income market experience can add distinct incremental value to clients.
“Creating new indices and ETF products tracking them allows investors to directly benefit from BlackRock investment insights and sophisticated risk management technology developed over decades of active and index fixed income management,” says Martin Small, US Head of iShares at BlackRock .
BlackRock has also launched two new ESG fixed income funds designed to combine the ease and convenience of a fixed income ETF with ESG based investment strategies.
The firm is launching the iShares ESG USD Corporate Bond ETF (SUSC) and the iShares ESG 1-5 Year USD Corporate Bond ETF (SUSB). Both funds track benchmarks developed through a partnership between Bloomberg/Barclays and MSCI and are designed to deliver similar risk and return characteristics as the traditional benchmark, however achieve a higher ESG score.
“We launched the industry’s first bond ETFs fifteen years ago, giving investors exposure to Treasuries and US investment grade corporate bonds for the first time in an ETF. Now we want to provide a solution for investors seeking access to fixed income through an ESG lens. These new products are the first exposures of their kind in an ETF wrapper and complement iShares existing ESG suite,” says Small.

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