iShares launches ETF with focus on top-rated government bonds
iShares, the exchange traded funds (ETF) platform of BlackRock, has launched the iShares global government AAA-AA capped bond fund, the first ETF to offer exposure to top rated global rated government bonds.
The fund aims to provide investors with exposure to high quality government debt with global diversification, at a time when they are increasingly concerned with government bond risk, particularly in the Eurozone.
The new ETF is listed on the London Stock Exchange and will invests in fixed-rate local currency bonds issued by developed countries worldwide, which are rated AA3 or higher, based on ratings from Fitch, Moody’s and Standard & Poor’s. It is physically backed and has a total expense ratio of 0.20%.
To ensure diversification, the fund caps exposure to any one top rated country to 20% of the fund, and allocation to AA rates countries may not exceed 10%. The index contains bonds issued by 19 countries in 13 currencies, at end of August.
Alex Claringbull, senior fixed income portfolio manager, said: “Today’s launch recognises the challenges investors now face with a decreasing number of highly rated government bond issuers available.
“With this global product, including issuers such as the Nordic countries, Australia and Singapore, we are offering access to some of the highest quality government bonds throughout the global economy in one single, cost efficient, fund.”
This fund is the twelfth fixed income ETF iShares has launched in Europe this year. In total, iShares now offers 56 fixed income ETF products and plans to continue expanding the product range.