Markit, the firm behind the iBoxx range of indices, has announced the launch of a rules-based framework designed for the creation of systematic factor-based – or “smart beta” – fixed income indices. Ibrahim Kara, Director and Head of Index Research at Markit, commented: “[The] framework enables us to build indices based on internal and external factor models, while ensuring the replicability of the index. This new offering complements our traditional market value-weighted and liquidity focused indices.” More than $80bn in ETF assets are linked to iBoxx indices, of which more than $4bn is linked to alternatively weighted iBoxx indices.

The exponential growth of assets invested in exchange-traded funds has been one of the most significant developments in financial markets in recent years. In Europe, however, wide acceptance of ETFs in the investment community has not translated into wide acceptance in collateral management. According to Markit, over 55% of delegates at their recent Securities Finance forum stated they didn’t accept or post ETFs as collateral, despite many of these ETFs being tied to assets which are readily acceptable as collateral. Improving the use of ETFs as collateral in Europe has the potential to reduce fees, increase liquidity and reduce bid-offer spreads.

BlackRock has expanded its fixed income and equity ranges with the launch of two new iShares ETFs. The funds, the iShares Euro Corporate Bond BBB-BB UCITS ETF (IEBB) and iShares US Equity Buyback Achievers UCITS ETF (BACK), provide highly targeted exposure to European corporate bonds and to US companies undertaking buyback programmes. Tom Fekete, Head of Product Development for iShares in EMEA, said: “Investors are increasingly turning to ETFs as a way to gain precise exposure to markets that have otherwise been difficult to access. These funds give instant and low-cost access for those investors wanting to express a specific view on European corporate bond and US equity markets.”

BlackRock, the asset manager behind the iShares brand of exchange-traded funds, has expanded its range of over 80 fixed income ETFs with two funds that purchase long-dated US and Eurozone government bonds with maturities of 15 years or more. The funds, which launched on the London Stock Exchange and Deutsche Börse last week, build out iShares’ suite of over 35 government bond ETFs and allow investors to be more precise with their sovereign exposure by targeting specific durations.

Singapore Exchange (SGX) and Thomson Reuters have teamed up to launch a suite of fixed income indices tracking the performance of Singapore dollar (SGD)-denominated government and corporate bonds. The Thomson Reuters/SGX Singapore Fixed Income Index suite covers over 80% of the SGD plain vanilla bullet bond market and is divided into various sub-indices along issuer, credit rating and maturity buckets. The suite’s fair value, evaluated pricing methodology makes the indices ideal for the creation of exchange-traded funds which seek to provide specific investment access to Singapore debt.

UBS Global Asset Management has partnered with five leading fund platforms – Ascentric, Hargreaves Lansdown, Nucleus Financial, Raymond James and Transact – to make 14 core exchange-traded funds more accessible to UK financial advisers and private investors. Andrew Walsh, Head of ETF Sales UK at UBS Global Asset Management, said: “For IFAs, the RDR has sharpened the focus on costs and margins. Against this backdrop, we expect ETFs to become increasingly attractive in light of their low cost, efficiency and transparency.”

iShares, the exchange-traded funds platform of BlackRock, has listed three passively managed ultrashort bond ETFs and two short-duration bond ETFs on the London Stock Exchange. The ultrashort bond ETFs are the first of their kind in Europe. The new funds come in response to investor demand for products that can help mitigate the risk posed by potential rising developed market interest rates, as well as for exposures that can provide better returns than cash.

SPDR ETFs, the exchange-traded funds (ETF) platform of State Street Global Advisors, has rolled out a new bond ETF designed to provide European investors with access to the US short-term, high-yield bond market. The newly launched fund, which is physically replicated, is linked to the Barclays 0-5 Year US High Yield Bond Index, a broad-based benchmark that measures the performance of US dollar-denominated high-yield corporate bonds that have a remaining maturity of less than 5 years.

iShares has expanded its fixed income ETF line-up with the launch of the iShares $ Corporate Bond Interest Rate Hedged UCITS ETF (LQDH) and iShares £ Corporate Bond Interest Rate Hedged UCITS ETF (SLXH) on the London Stock Exchange. The funds are designed to cater for investors who wish to obtain additional yield via corporate bonds, but are concerned about the impact of rising interest rates at a time when uncertainty around central bank monetary policy has seen volatility in yields increase.

Deutsche Asset & Wealth Management (DeAWM), the investment management division of Deutsche Bank, has rolled out eight new fixed income ETFs this month in an assertive effort to position itself as a leading European provider in the fixed income space. Simon Klein, DeAWM’s Head of Exchange Traded Product Sales, EMEA and Asia, said: “The development of the fixed income space is still nascent, but we’re well placed to be a leading provider of fixed income ETFs as this area of the market develops.”