iShares launches ETF focused on top-rated global government bonds
iShares has launched the iShares Global Government AAA-AA Capped Bond fund, the first ETF to offer global AAA/AA rated government bond exposure.
The fund is launched at a time when investors are increasingly concerned with government bond risk, particularly in the Eurozone, and are searching for high quality government debt with global diversification.
Listed on the London Stock Exchange, the iShares Global Government AAA-AA Capped Bond fund invests in fixed-rate local currency bonds, issued by developed countries worldwide, which are rated AA3 or higher, using the median of ratings given by three leading credit-rating agencies Fitch, Moody’s and Standard & Poor’s. The fund is physically backed and has a total expense ratio of 0.20 per cent.
To ensure diversification, a cap has been applied so that no AAA rated country accounts for more than 20 per cent of the fund and no AA rated country accounts for more than 10 per cent. As at 31 August 2012, the index contained bonds issued by 19 countries denominated in 13 currencies.
Alex Claringbull (pictured), senior fixed income portfolio manager for BlackRock’s iShares fixed income range, says: “Today’s launch recognises the challenges investors now face with a decreasing number of highly rated Government bond issuers available. By designing this global product, including issuers such as the Nordic countries, Australia and Singapore, we are offering access to some of the highest quality Government issued bonds throughout the global economy in one single, cost efficient, fund.
“This fund is the 12th fixed income ETF we have launched in Europe this year. We will continue to build out our range so that investors can select the exposure that best fits their needs and tailor their bond allocations by geography, currency and rating.”
iShares now offers 56 fixed income ETF products and continues to innovate and develop products to suit evolving investor appetite across geographies, issuers and yield appetite.
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