Boom in fixed-income ETFs

29 September 2009

iShares has launched nine new exchange traded funds (ETFs) on the London Stock Exchange, including four fixed-income products. 

The provider, which is the latest to join the trend towards the asset class, says fixed-income products remain attractive to investors during the current climate.  

However, Axel Lomholt, head of product development for iShares Europe, adds they have remained one of the last mainstream asset classes for ETF providers to tackle, mainly because of the difficulty providers have in developing products that track the broad fixed-income indices.

The ETFs launched are: Barclays Euro Corporate Bond ex-Financials; Barclays Euro Corporate Bond ex-Financials 1-5; Barclays Euro Corporate Bond 1-5; and iBoxx £ Corporate Bond ex-Financials.

"These new funds provide the building blocks for investors to increase their tactical exposure in the euro corporate bracket," says Lomholt.

iShares is not the first to branch to make the move into this relatively underdeveloped product range.

On 17 September, db x-trackers announced six new fixed income ETFs, listed on the London Stock Exchange.

At the time, Manooj Mistry, head of db x-trackers UK, said the new products offered an ideal addition to any portfolio because they not only maintained the flexibility of traditional ETF investments, but also provided a greater level of stability to investors.

ETFs continue to grow in popularity; last month, data revealed that European ETF assets have pushed an all-time high. The figures, compiled by Barclays Global Investors, showed that at the end of August 2009, European ETF assets were up 20.2% on July 2008 totals – an increase from $159.9 billion to $192.1billion.

This result has been driven mainly by trends in emerging market and fixed-income ETFs. At the end of August, fixed-income ETFs had grown by $6.1 billion since the start of the year to reach $46.9 billion.

The other five funds launched by iShares are accumulating funds: MSCI Emerging Markets (Acc); S&P 500 (Acc); MSCI World (Acc); MSCI Europe (Acc); and MSCI Japan (Acc).

There are now 129 iShares funds listed on the London Stock Exchange.

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