Enables investors to access a range of global high yield bonds in a single trade…..
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iShares, the exchange traded funds (‘ETF’) platform of BlackRock, has today launched the iShares Global High Yield Corp Bond CHF Hedged UCITS ETF at SIX Swiss Exchange AG. The fund aims to reduce the impact currency fluctuations can have on returns when investing in a global bond portfolio.
The physically-replicating iShares fund allows investors to access global high yield bonds in a single trade, whilst minimising currency risk. When investing internationally, investors are essentially exposed to two risks: movement in the value of the underlying asset and fluctuation between their portfolio base currency and the currency in which assets are denominated. This currency exposure can introduce unintended risk into a portfolio especially during periods of increased currency volatility. Hedging currency exposure allows investors to separate and manage these risks effectively.
Thomas Fekete, Head of Product iShares EMEA commented:
“We’re seeing a long-term trend for investors to diversify their fixed income allocations globally whilst at the same time there’s also been heightened volatility in currency markets. These factors are creating demand for simple and effective currency hedged solutions and we’ve designed this fund with these client needs in mind.”
Christian Gast, Head of iShares Switzerland, added:
“This fund is our first Swiss Franc currency hedged fixed income ETF in Europe and builds on our existing range of currency hedged ETFs. They enable investors to hedge the currency of their investment returns in a single transaction without having to monitor and maintain a separate currency hedge.”
Currency-hedged bond portfolios can also be less volatile than un-hedged international portfolios, providing an additional attraction for investors. For example, the volatility of the un-hedged Markit Global High Yield index was 10.51%* over the past 4 years, whereas the CHF-hedged version of the index had a volatility of 4.79%*.
The iShares Global High Yield Corp Bond CHF Hedged UCITS ETF has a total expense ratio of 0.55% and follows a static monthly hedging index methodology.
*data from Markit iBoxx, 31/03/2014
Source: ETFWorld.co.uk
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