BlackRock has expanded its fixed income range with the launch of two broad-based high yield ETFs, ETF Stream can reveal.
The iShares Broad $ High Yield Corp Bond UCITS ETF (HYUS) and the iShares Broad € High Yield Corp Bond UCITS ETF (EH1Y) are listed on the London Stock Exchange and Deutsche Boerse with total expense ratios (TERs) of 0.25%.
HYUS tracks the ICE BofA Merrill Lynch US High Yield Constrained index which offers exposure to 1,939 US high yield bonds with a yield of 5.4% and an average duration of 4.3 years.
Physically-replicated, HYUS is the broadest ETF in Europe to offer exposure to the $1.7trn US high yield market.
The US-listed version of HYUS, the iShares Broad USD High Yield Corporate Bond ETF (USHY), has gathered $6.9bn assets under management (AUM) since launching in October 2017.
Meanwhile, EH1Y tracks the ICE BofA Euro High Yield Constrained index which is a basket of 813 euro-denominated high yield bonds with a yield of 3.7% and an average duration of 3.7 years.
EH1Y is physically replicated and will offer investors exposure to a market that currently totals $504bn.
BlackRock said high yield is currently an option for investors looking for a pick-up in yield combined with a reduction in duration versus traditional investment grade credit amid tightening monetary policy.
Ashley Curtis, iShares head of fixed income distribution, EMEA, at BlackRock, added: “The launch is particularly timely as investors search for exposures that offer both diversification and yield while needing nimble asset allocation vehicles.
“It is an exciting time as the industry continues to evolve and focus on future product innovation in step with fixed income markets and investor preference.”
BlackRock already offers two high yield ETFs in Europe, the $6.5bn iShares $ High Yield Corp Bond UCITS ETF (SHYU) and the $5.7bn iShares € High Yield Corp Bond UCITS ETF (IHYG), which track high yield indices from IHS Markit.
In terms of comparison, SHYU has a 72% weighting to 'BB' bonds, a 20.9% weighting to 'B' and a 3% weighting to 'CCC' while HYUS has a 50% weighting to 'BB', a 37% weighting to 'B' and a 12% weighting to 'CCC'.
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