BlackRock has introduced a range of Ucits iBond ETFs, providing European investors with simple access to fixed-income exchange traded funds that expire on a set date, precisely like their underlying bond portfolios. The products, which mature and pay out like bonds, trade like stocks, and give access to a diversified basket of equities, have been …
BlackRock has introduced a range of Ucits iBond ETFs, providing European investors with simple access to fixed-income exchange traded funds that expire on a set date, precisely like their underlying bond portfolios. The products, which mature and pay out like bonds, trade like stocks, and give access to a diversified basket of equities, have been accessible in the US since 2010 but did not gain much traction during the low-interest rate decade prior to the Covid-19 outbreak. Similar to this, BlackRock’s prior attempt to get Europeans interested in iBonds failed after the launch of a US investment-grade credit fund in 2015. Since the iBonds reached their liquidation date in 2018, no new iBonds have been issued for investors in Europe. BlackRock, however, claimed that the return of higher interest rates has resulted in a boom in US interest in the products. The manager received inflows of $8.1 billion in 2022 and an additional $5.2 billion in the seven months leading up to the end of July this year for its US iBond business, which covers Treasuries, municipal bonds, investment-grade and high-corporate debt.
According to Brett Pybus, worldwide co-head of iShares fixed income ETFs for BlackRock, “the more favourable fixed income investing environment experienced since 2022 has driven increased adoption of iBonds.” He claimed that the use of iBonds by advisers in the US has also increased as they used the products more frequently to improve their services. Investment grade corporate paper is the only type of Ucits that BlackRock is initially offering. Two US dollar-denominated ETFs and two euro-denominated ETFs have 2026 and 2028 maturity dates, respectively.
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