BlackRock has expanded its fixed income range with the launch of the iShares Global Aggregate Bond UCITS ETF (AGGG LN) on London Stock Exchange (LSE). The fund provides diversified exposure to investment grade fixed income across currencies, regions and sectors.
The new ETF provides access to a diversified portfolio of global investment grade bonds.
The fund tracks the Bloomberg Barclays Global Aggregate Index, a benchmark measure of global investment grade debt from 24 local currency markets that is one of the most widely followed fixed income indices globally. The index provides exposure to treasuries, government-related, corporate and securitized fixed-rate bonds from developed and emerging markets.
Brett Olson, head of iShares Fixed Income EMEA, commented: “Investors are increasingly diversifying their bond allocation to protect their portfolios from potential sudden market moves. This ETF provides access to broad fixed income exposure meaning investors can avoid the time and resource-consuming task of picking out individual bonds.
“As the broader fixed income market continues to evolve, investors are increasingly seeking the diversification and flexibility that ETFs can offer, and using them alongside traditional security selection. Our 84-strong UCITS bond ETF range provides investors with fixed income building blocks that can act as ballast against equity market risk, while pursuing a consistent income.”
The index is currently yielding 2.5% with an effective duration of 7.0 years. The US is the largest country exposure with 39% of the weight, followed by Japan (16.7%) and France (6.0%). The majority of securities in the index are treasuries (53.5%), with the next largest sectors being mortgage-backed securities (13.7%) and corporate – industrial (10.5%).
Looking at the credit ratings, the majority of the portfolio comprises Aaa securities (39.8%), followed by A (26.6%), Baa (17.3%), and Aa (16.3%).
AGGG is also available in the following currency hedged versions: USD-hedged (AGGU LN), GBP-hedged (AGBP LN) and EUR-hedged (AGGH LN).
The new ETF will go into direct competition with two existing European-listed ETFs that track similar indices from Deutsche Asset Management and Amundi. The first is the db x-tracker Barclays Global Aggregate Bond UCITS ETF (XBAG GR), which tracks the Barclays Global Aggregate Bond Index. The fund was launched in March 2014 and has $871 million in assets under management (AUM) with a total expense ratio (TER) of 0.30%.
The second is the Amundi Index Barclays Global AGG 500M UCITS ETF (GAGG LN), which tracks the Barclays Global Aggregate 500M Index. The fund was launched in September 2016 and has €260m in AUM with a TER of 0.20%.
The BlackRock product is launching with a considerably lower annual charge than either fund – just 0.10%.