Invesco has launched five new ETFs giving investors access to a range of government bonds all with different maturities on Xetra and Börse Frankfurt.
Investors can participate in the performance of government bonds from France, Germany, Italy, the Netherlands and Spain. The included securities are denominated in euros, have an investment grade rating of at least Baa3/BBB-/BBB- and an outstanding nominal value of at least EUR300 million.
The ETFs cover bonds with residual maturities of at least one year, one to three, three to five, five to seven or seven to ten years are available.
Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco, says: “Many investors have European government bonds for core allocation to diversify and reduce their portfolio volatility. We have developed these new ETFs with the aim of delivering the right balance between performance and broad market exposure. In addition, given the persistent low yields in Europe, we believe the low costs of these ETFs will attract investors who are increasingly price-sensitive.”
The Bloomberg Barclays Euro Government Select Indices have been chosen as the benchmarks for the targeted maturities products. These indices provide exposure to the five most liquid economies in the Eurozone: France, Germany, Italy, the Netherlands and Spain.
The Bloomberg Barclays Euro Treasury Majors Bond Index has been chosen for the all-maturities ETF. This benchmark includes the five countries in the other indices plus Austria, Belgium, Finland, Ireland and Portugal. The addition of these countries is intended to provide broader Eurozone exposure.
Syms adds: “With USD33 billion in AuM, Euro government bonds is the second-largest fixed income ETF category in Europe. Over the past 12 months, there has been in excess of USD5 billion of flows into this sector1 and, in today’s uncertain environment, we would expect this allocation to increase as investors adjust their risk profiles. Currently, we believe the backdrop for Euro government bonds is supportive, with the ECB expected to announce further easing in the September meeting.”
The five new funds and their respective reference indexes are: Invesco Euro Government Bond UCITS ETF (Bloomberg Barclays Euro Treasury Majors Bond Index); Invesco Euro Government Bond 1-3 Year UCITS ETF (Bloomberg Barclays Euro Government Select 1-3 Year Index); Invesco Euro Government Bond 3-5 Year UCITS ETF (Bloomberg Barclays Euro Government Select 3-5 Year Index); Invesco Euro Government Bond 5-7 Year UCITS ETF (Bloomberg Barclays Euro Government Select 5-7 Year Index); and the Invesco Euro Government Bond 7-10 Year UCITS ETF Bond ETF (Bloomberg Barclays Euro Government Select 7-10 Year Index).