InvestmentsMar 6 2012

iShares launches two ETFs

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ByEmma Ann Hughes

The exchange traded funds platform of BlackRock has today (6 March) launched two new funds on the London Stock Exchange.

Axel Lomholt, head of iShares product development EMEA, said the two new ETFs, the EM Asia Local Government Capped Bond fund and the MSCI Mexico IMI Capped fund, would meet the needs of investors searching for a steady stream of income available or single country emerging market exposure.

He added the iEM Asia Local Government Capped Bond fund is the first ETF in Europe to offer exposure to fixed rate government bonds that are issued by emerging market countries in Asia and denominated in their local currencies.

It offers access to a basket of bonds from countries including Thailand, South Korea, Philippines, Malaysia and Indonesia in a single trade.

The fund is physically-replicating, with full transparency into the underlying bonds and has a total expense ratio of 0.5 per cent, Mr Lomholt added.

In order to achieve best execution for investors, iShares is using BlackRock’s fixed income team in Singapore, who will handle the portfolio management and trading of the fund.

The iShares MSCI Mexico IMI Capped fund is physically-replicating and provides exposure to the largest and most liquid stocks in the market.

A cap is applied to ensure no single group entity accounts for more than 30 per cent of the index. The fund has a TER of 0.65 per cent.

Mr Lomholt said: “European investors are continuing to search for new sources of yield and new ways in which they can secure sustainable income streams.

“Asian debt markets have grown steadily over the last ten years, and bonds denominated in local currencies provide a different yield and risk profile to US dollar denominated debt, allowing investors to diversify their fixed income holdings.

“As this hunt for yield continues, we are seeing significant interest in fixed income ETFs from professional investors looking for efficient and cost effective ways to construct a portfolio.

“We have also built out our emerging markets range to offer new opportunities to access growing markets at a country and regional level efficiently.”