BlackRock has unveiled Europe’s first fixed maturity corporate bond ETFs.
The four-strong ETF range will offer exposure to investment-grade corporate bonds across various countries and sectors, all with a defined individual maturity.
The two fixed maturity dates are December 2026 and 2028, respectively, with the option of US dollar- or euro-denominated debt.
The four ETFs are:
iShares iBonds Dec 2026 Term $ Corp UCITS ETF (ID26)
iShares iBonds Dec 2026 Term € Corp UCITS ETF (IB26)
iShares iBonds Dec 2028 Term $ Corp UCITS ETF (ID28)
iShares iBonds Dec 2028 Term € Corp UCITS ETF (IB28)
ID26 and ID28 are listed on the London Stock Exchange, Deutsche Boerse and Euronext Paris while IB26 and IB28 are listed on Deutsche Boerse, all with total expense ratios (TERs) of 0.12%.
IB26 and IB28 currently have yields to maturity of 3.97% while ID26 and ID28 have yields of 5.30% and 5.26%, respectively, as at 4 August.
The range will track respective Bloomberg indices which implement an ESG screen meaning the ETFs are classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).
BlackRock said investors will now be able to access corporate bonds with specific maturities while benefitting from the diversification, transparency and liquidity benefits of ETFs.
Brett Pybus (pictured), global co-head of iShares fixed income ETFs at BlackRock, said: “iBonds ETFs are designed to mature like a bond, trade like a stock and diversify like a fund, all in a cost-efficient and transparent ETF wrapper.
“The fixed maturity nature of iBonds ETFs aims to offer investors clarity into their yield expectations and investment horizon. Bond ETFs are increasingly being used as an alternative to picking individual bonds which can be costly for investors.”
Nick Gendron, global head of fixed income indices at Bloomberg, added: “The need for fixed maturity indices has been proven through many different market cycles. We are proud to have been selected by BlackRock to provide benchmarks for these four new corporate bond ETFs in Europe that initially focus on both three and five-year maturities."
The world’s largest asset manager launched the first iBonds ETF in the US in 2010 with the range seeing a combined $13.3bn inflows in 2022 and 2023 alone, as at the end of July.
Demand for fixed income has been strong this year. According to data from Morningstar, fixed income ETFs in Europe saw a record €31bn inflows in H1 as investors looked to take advantage of the significant spike in yields towards the end of last year.
BlackRock currently dominates the fixed income ETF market in Europe with a 58.3% market share, as at the end of June, according to Morningstar.
In July, AXA Investment Managers entered fixed income ETFs with the launch of an active strategy offering exposure to euro corporate bonds linked to the Paris-Aligned Benchmark (PAB), the AXA IM Euro Credit PAB UCITS ETF (AIPE).