BlackRock launches new core fixed income ETF

Dec 8th, 2023 | By | Category: Fixed Income

BlackRock has launched a new actively managed fixed income ETF delivering exposure to a diversified core bond strategy.

BlackRock has launched a new actively managed fixed income ETF delivering exposure to a diversified core bond strategy.

BlackRock has introduced a new actively managed core bond ETF.

The BlackRock Total Return ETF (BRTR US) has been listed on Nasdaq with an expense ratio of 0.38%.

The fund, which is managed by Rick Rieder, CIO of Global Fixed Income at BlackRock and recipient of the 2023 Morningstar Outstanding Portfolio Manager Award, is designed to exploit alpha opportunities within the vast fixed income landscape.

It aims to generate consistent and attractive returns through varying market conditions while diversifying across an array of fixed income securities including corporate bonds and notes, mortgage-backed securities, asset-backed securities, convertibles, preferred securities, and government obligations.

International exposure is a notable component, with up to 30% of the ETF’s assets allocated to foreign issuers, including a potential 20% in emerging markets.

High yield bonds also play a significant role, comprising up to 20% of the fund’s assets. Additionally, the fund allocates up to 15% of its net assets to collateralized debt obligations, including a maximum of 10% in collateralized loan obligations.

“With over 60,000 global fixed income securities, it can be incredibly complex for the everyday investor to differentiate between the winners and losers,” said Rieder. “Through the ETF wrapper, we seek to take advantage of dispersion in markets, target durable alpha for our clients, and aim to deliver it in an efficient, transparent manner.”

BRTR is the second active ETF managed by BlackRock’s Fundamental Fixed Income team, following the launch of the BlackRock Flexible Income ETF (BINC US) in May 2023. Designed to complement core bond exposures, the fund aims to deliver long-term income with a secondary focus on capital appreciation by primarily allocating to harder-to-reach fixed income sectors such as high yield bonds, emerging markets debt, and securitized assets.

BlackRock notes that demand for active ETFs is particularly strong among fee-based advisers who are using these products as building blocks for model portfolios. In addition, active ETFs are helping provide end investors with new access points to active management.

Dominik Rohe, Head of Americas ETF and Index Investments business at BlackRock, said: “The rapid growth of active ETFs has proved that ETFs are no longer limited to index management. Today’s launch represents iShares’ commitment to innovation and helping our clients achieve new sources of alpha more efficiently and conveniently. More investors can now access BlackRock’s premier active management capabilities in an investment vehicle that best suits their needs.”

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