iShares expands fixed income range and EM equity exposure
iShares, the Exchange Traded Funds (ETF) platform of BlackRock, has launched two funds on the London Stock Exchange, one focusing on Asian local government debt and the other on Mexican equities.
The launches expand its range of emerging market products across fixed income and equities, and targets investors searching for a steady stream of income.
The iShares Barclays Capital EM Asia Local Govt Capped Bond fund offers exposure to fixed rate government bonds that are issued by emerging market countries in Asia and denominated in their local currencies. It offers exposure a basket of bonds from countries including Thailand, South Korea, Philippines, Malaysia and Indonesia in a single trade. The fund is physically-replicating, with full transparency into the underlying bonds and has a total expense ratio (TER) of 0.50%.
The ETF tracks an index iShares constructed in association with Barclays Capital. This included introducing a cap so that no single country accounts for more than 40% of the index. BlackRock’s fixed income team in Singapore will handle the portfolio management and trading of the fund.
The iShares MSCI Mexico IMI Capped fund is physically-replicating and provides exposure to the largest and most liquid stocks in the market. A cap is applied to ensure no single group entity accounts for more than 30% of the index. The fund has a TER of 0.65%.
Axel Lomholt, head of iShares product development EMEA, said: “European investors are continuing to search for new sources of yield, and new ways in which they can secure sustainable income streams.
“Asian debt markets have grown steadily over the last ten years, and bonds denominated in local currencies provide a different yield and risk profile to US dollar denominated debt, allowing investors to diversify their fixed income holdings.
“As this hunt for yield continues, we are seeing significant interest in fixed income ETFs from professional investors looking for efficient and cost effective ways to construct a portfolio.