BlackRock has launched a new fixed income exchange traded fund dealing in global aggregate bonds – one of the most popular fixed income indices.
The iShares Global Aggregate Bond UCITS ETF (AGGG) is, BlackRock says, a way to achieve “diversified exposure to investment grade bonds”, spread across currency, region and sector. The fund is physically-replicating, meaning it holds the underlying bonds of the index, and has a total expense ratio of 0.10%.
The fund launches with currency-hedged share classes, including US Dollar (AGGU), Sterling (AGBP) and Euro (AGGH), BlackRock said in statement announcing the launch
The fund tracks the Bloomberg Barclays Global Aggregate Index – a measure of global investment grade debt from 24 local currency markets.
The index provides exposure to treasuries, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets companies.
‘Sudden market moves’
Brett Olson, head of iShares Fixed Income EMEA, said that investors are increasingly diversifying their bond allocation to protect their portfolios from potential “sudden market moves”.
“This ETF provides access to broad fixed income exposure meaning investors can avoid the time and resource-consuming task of picking out individual bond,” he said.
“As the broader fixed income market continues to evolve, investors are increasingly seeking the diversification and flexibility that ETFs can offer, and using them alongside traditional security selection. Our 84-strong UCITS bond ETF range provides investors with fixed income building blocks that can act as ballast against equity market risk, while pursuing a consistent income.”
A recent survey by KPMG found that 60% of the wealth managers and advisers polled used fixed income products in portfolio construction. To date, according to BlackRock research, US$142bn has been globally deployed into bond ETFs, as investors increasingly look beyond equities and use index products to gain exposure to other asset classes.