Continental Europe’s investment platform, Scalable Capital, has launched what it calls a new form of bond ETFs, offering retail investors the new European iShares iBonds products, which, it says, give clients access to a suite of products that combine the diversification, liquidity and tradability of an ETF with the fixed maturity of a bond.
Scalable notes that the iBond ETFs suite was only available in the US until recently.
BlackRock launches iBonds ETFs in Europe
Julius Weller, Vice President Broker at Scalable Capital, says: “With the turnaround in interest rates in Europe, bonds have become a relevant asset class again. While stock investing is already easily accessible for retail investors, this is not the case for bonds. High one-off investments with concentrated risk in one company or country as well as complex structures make it challenging. We want to change that, because bonds can help to stabilise a portfolio, especially in volatile markets.”
Christian Bimueller, Head of Digital Distribution Continental Europe for iShares and Wealth at BlackRock: “We are excited to broaden access to the bond market and make investing accessible and affordable for everyone. iBonds ETFs are designed to mature like a bond, trade like a stock and diversify like a fund, all in a cost-efficient and transparent ETF wrapper.”
Scalable writes that demand for European bond ETFs reached record levels in the first six months of 2023. During the same period, bond ETF investments exceeded USD2 trillion US globally for the first time, according to BlackRock data. “After all, at least in Europe’s low interest rate environment, it has not been possible for more than a decade to achieve attractive yields on moderate-risk bonds,” Scalable says.
“The iBonds combine the advantages of investing in individual bonds with the advantages of a classic ETF. Unlike investing directly in bonds, risk is spread across many issuers from a variety of sectors and countries. Buying and selling on the stock exchange is also possible at any time. At the same time, investors experience the same benefits as with classic bond investments, namely the fixed term of the iBonds as well as regular interest payments and a predictable return to maturity.”
In the initial offering, iBonds will be available with investment-grade corporate bonds denominated in euro or US dollar with maturities of three or five years.
In the Scalable Broker, the iBonds can be bought without order fees – as part of the PRIME partnership with BlackRock – from an order volume of 250 euro. Savings plans are free of charge as well. In both cases merely product costs, spreads and inducements may apply.
With 2.6 per cent p.a. interest on cash balances in PRIME+, a growing selection of bonds with interest rates of up to 3.6 per cent p.a. and a managed bond portfolio (InterestInvest) in digital wealth management, Scalable Capital writes that it offers numerous opportunities to benefit from higher interest rates.