BlackRock adds long-dated sovereign bond ETFs to iShares fixed income range

Jan 30th, 2015 | By | Category: Fixed Income

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BlackRock, the asset manager behind the iShares brand of exchange-traded funds, has expanded its range of over 80 fixed income ETFs with two funds that purchase long-dated sovereign bonds with maturities of 15 years or more.

BlackRock adds long-dated sovereign bond ETFs to iShares fixed income range

BlackRock has added two long-dated sovereign bond ETFs to its iShares fixed income range.

The funds, which launched on the London Stock Exchange and Deutsche Börse last week, build out iShares’ suite of over 35 government bond ETFs and allow investors to be more precise with their sovereign exposure by targeting specific durations.

The iShares $ Treasury Bond 20+ Yr UCITS ETF is linked to the Barclays US 20+ Year Treasury Bond Index and invests in fixed rate US Dollar denominated bonds that are issued by the US Treasury and have an outstanding maturity of at least 20 years. It becomes one of the longest duration US treasury ETFs in iShares’ European range. The fund has a total expense ratio of 0.20%.

The iShares Euro Government Bond 20yr Target Duration UCITS ETF is linked to the Markit iBoxx EUR Eurozone 20yr Target Duration Index and purchases bonds rated AA- or better that have been issued by a central government of members of the Eurozone, and are denominated in euros or in a pre-euro currency. It aims to achieve a constant duration of approximately 20 years and a cap is applied so that no single bond accounts for more than 30%. The fund has a total expense ratio of 0.15%.

Brett Olson, Head of iShares Fixed Income EMEA for BlackRock, commented: “One of the dominant trends of the last five years has been investors diversifying their fixed income allocations. Our clients are looking for ways to express specific views on countries, asset classes and duration risk amongst other features. We’ve expanded our range as a result, and today’s funds provide an additional way to add long-dated Euro and Treasury bonds to a portfolio, something that liability-driven investors such as DB plan managers may find particularly attractive.”

He added: “Fixed income ETFs offer access to a diversified range of bonds in a single, cost-efficient trade and are one of the industry’s major growth areas. They attracted global net new flows of $84.5bn in 2014, a new record, and we expect this growth will continue in 2015.”

Both ETFs are physically backed and purchase the underlying bonds.

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