BlackRock unveils low-cost Japan government bond ETF on TSE

Mar 3rd, 2020 | By | Category: Fixed Income

BlackRock has launched a new fixed income ETF in Japan providing low-cost exposure to Treasury bonds issued by the Japanese government.

BlackRock unveils low-cost Japan government bond ETF on TSE

The ETF provides access to a broad range of fixed-rate Japanese government bonds for an annual management fee of just 0.06%.

The iShares Core Japan Government Bond ETF (2561 JP) has listed on the Tokyo Stock Exchange and comes with an expense ratio of 0.06%.

Income is distributed to investors on a quarterly basis.

The fund is linked to the FTSE Japanese Government Bond Index which consists of a broad range of fixed-rate, local-currency Japanese government bonds.

Japanese government bonds currently hold a credit rating of A+ according to Standard & Poor’s.

Bonds with maturities greater than one year and amounts outstanding above ¥500 billion are eligible for selection.

Constituents are weighted by market value and rebalanced monthly.

The index has an effective duration of 11.42 years and a yield to maturity of just 0.03% due to the yield curve being in negative territory at the ten-year mark and under.

Yields are negative in Japan due to persistent quantitative easing enacted by the country’s central bank. The Bank of Japan has been buying large volumes of government bonds for several years, openly pursuing a negative interest rate policy in a bid to boost consumption and prevent a return to deflation that caused the economy to stagnate for nearly two decades.

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