BlackRock has slashed the fees on two of its largest fixed income ETFs providing exposure to UK government bonds, commonly known as gilts. The ongoing charges figure (OCF) for the iShares Core UK Gilts UCITS ETF (IGLT LN) has been reduced to 0.07% from 0.20%, while the iShares GBP Index-Linked Gilts UCITS ETF (INXG LN) has been trimmed to 0.10% from 0.25%.

In a further bid to shake up the indexing space, Morningstar has introduced a comprehensive suite of fixed income indices that track the performance of all major global bond market asset classes. The indices, which have been designed for use as performance benchmarks or as bases for investable index products such as ETFs, cover Treasury, inflation-protected, government-related, corporate, securitized/covered, mortgage-backed, and asset-backed exposures. “We have constructed a comprehensive global family of bond indexes that represent discrete asset class exposures, without any gaps or overlap,” said Sanjay Arya, Head of Indexes at Morningstar.

By Matthew J. Bartolini, Head of SPDR Americas Research, State Street Global Advisors.

Based on key systemic and persistent traits, high yield corporate bonds should be viewed as a strategic asset class within the portfolio construction process – even if the flow patterns within high yield ETFs indicate a more tactical investor mindset.

The first quarter of 2019 saw the largest quarterly flow into bond ETFs on record – both in Europe and globally. The rising tide helped lift two iShares funds – iShares Core € Corp Bond UCITS ETF (IEAC) and iShares J.P. Morgan EM Local Govt Bond UCITS ETF (IEML) – above the $10 billion AUM mark, becoming the first bond ETFs in Europe to do so. Brett Olson, Head of Fixed Income iShares EMEA at BlackRock, said: “These milestones are evidence of a shift in mindset within an industry undergoing fundamental change, with more and more investors using ETFs at the core of their portfolios.”

By Karen Schenone, Fixed Income Product Strategist, BlackRock.

The recent yield curve inversion has many market watchers wondering whether recession is on the horizon. The corporate bond market, however, tells a different story.

Bloomberg and MSCI have partnered together to launch a series of environmental, social, and governance (ESG) fixed income indices designed for the Canadian market. Co-branded as the Bloomberg Barclays MSCI Canada ESG Indices, the range covers the investment grade aggregate and corporate bond markets and is built using data from MSCI ESG Research.

Invesco has seen more than $1 billion flow into its newly launched Invesco US Treasury Bond 7-10 year UCITS ETF (TREX LN), making it one of the issuer’s fastest-growing ETFs ever and one of the most successful ETF debuts in Europe. The ETF was launched on 11 January and has ongoing charges of just 0.06%. Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco, said, “Given that our 7-10 year US Treasuries ETF launched with just $5 million in seed capital, we think this showcases the profound liquidity of such vehicles and the simplified, highly efficient means they offer institutional clients to access fixed income exposure.”

WisdomTree has launched the WisdomTree USD Floating Rate Treasury Bond UCITS ETF – the first ETF in Europe to provide targeted exposure to Floating Rate Notes (FRNs) issued by the US government. Christopher Gannatti, WisdomTree Head of Research, commented, “For investors who are looking for another government bond instrument to replace some of the low yield exposures present in many developed market treasuries, US Treasury FRNs could provide a yield enhancement, especially given the flatness of the US yield curve.”

RBC iShares, the brand name for the strategic alliance between RBC Global Asset Management and BlackRock Canada, has unveiled a sustainable core suite of funds with the launch of six new ETFs on Toronto Stock Exchange. “The addition of the iShares Sustainable Core ETF suite to the RBC iShares platform brings an entirely new and innovative solution set for the growing number of Canadians looking to incorporate environmental, social, and governance factors into their portfolios,” said Doug Coulter, President, RBC GAM.

Invesco has launched two new ETFs – the Invesco UK Gilt 1-5 Year UCITS ETF (GLT5 LN) and the Invesco UK Gilts UCITS ETF (GLTP LN) – offering the lowest-cost exposure to UK government bonds, or gilts, of any competing product in Europe. Paul Syms, Head of EMEA ETF Fixed Income Product Management at Invesco, said, “For investors who want to take some risk off the table, or simply diversify their portfolios, UK government bonds may offer an attractive solution.”