Fixed Income  

iShares launches five short duration bond ETFs

Exchange-traded fund (ETF) provider iShares has listed five new bond products on the London Stock Exchange tracking short duration bond indices.

The company, which is owned by BlackRock, listed three “ultra-short” bond ETFs covering dollar, euro and sterling-denominated investment grade bonds maturing within the next 12 months, as well as floating rate notes maturing within three years. The products track recently-launched indices from Markit iBoxx and will cost investors 0.2 per cent.

iShares has also added the iShares Dollar Short Duration Corporate Bond ETF and iShares Dollar Short Duration High Yield Corporate Bond ETF, investing in dollar-denominated corporate bonds maturing within five years. Their total expense ratios are between 0.2 per cent and 0.45 per cent.

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All five products physically replicate the indices they track without the use of derivatives.

Increasing numbers of active bond fund managers have been reducing duration- a measure of how sensitive bonds are to movements in interest rates - in their funds in the past few months as the prospect of the end of quantitative easing in the US has led to increasing speculation about when central banks will raise interest rates.