iShares launches high yield corporate bond ETF

Jan 25th, 2016 | By | Category: Fixed Income

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iShares, the largest global exchange-traded fund provider by assets under management, has strengthened its range of fixed income ETFs with the launch of the iShares Euro Corporate Bond BB-B UCITS ETF (BBEB LN). The fund offers euro-denominated exposure to over 200 high yield corporate bonds with credit ratings between BB+ and B-.

The underlying index, the Markit iBoxx EUR Liquid High Yield BB-B Index, is market-weighted with a single issuer cap of 5% and a country cap of 20%. As of 11 January 2016, the fund has significant country exposures to Italy (20.4%), Germany (17.3%), France (12.0%) and the United Kingdom (7.5%). There are 204 holdings and the top issuers within the fund are Gaz Capital (3.0%), Thyssenkrupp (3.0%), Telecom Italia (2.8%) and Banco Popolare (2.4%). The weighted average maturity is 3.8 years, the weighted average yield to maturity is 4.7% and the effective duration is 3.3 years.

High yield corporate ETF launch enhances iShares’ European fixed income range

iShares have now launched 87 ETFs offering exposure to the European fixed income space.

Brett Olson, Head of Fixed Income for iShares in EMEA, commented: “Investors are diversifying their fixed income exposure as they look for ways to generate income amid historically low interest rates.  This ETF provides access to high yield bonds, whilst removing the higher credit risk associated with bonds rated lower than B-.”

The ETF carries a total expense ratio of 0.50% and is also offered through a GBP-denominated share class under the ticker BBSB.

According to London-based ETF consultancy ETFGI, fixed income ETFs attracted $81.5bn in net new assets during 2015, highlighting the continued demand for such products. iShares, the market leader for net gatherings over this period, now offers 87 funds catering to the European fixed income market.

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