iShares, the exchange-traded fund division of asset manager BlackRock, has launched the iShares International Aggregate Bond ETF (IAGG) on the BATS ETF Marketplace.
The iShares International Aggregate Bond ETF is a part of the iShares Core ETF Series, a suite of low cost diversified products aimed at buy-and-hold investors.
The new offering tracks the performance of the Barclays Global Aggregate ex USD 10% Issuer Capped (Hedged) Index. The fund provides low cost, efficient access to a broadly diversified range of international investment grade bonds while reducing the effects of currency volatility on returns through a hedging strategy.
The fund replaces the iShares Core GNMA Bond ETF (GNMA) as part of iShares US-listed Core ETFs, a suite of diversified, low cost funds aimed at buy-and-hold investors.
Ruth Weiss, Head of US iShares product team at BlackRock commented: “We launched iShares Core in October 2012 as a branded suite of ETFs for buy-and-hold investors looking for a simple, low cost way to invest over the long-term in stocks and bonds. We are providing investors with broader and more diversified exposures at competitive prices.”
As of 12 November 2015, the fund had major country exposures with Japan (13.0%), the United Kingdom (12.8%), France (12.7%), Germany (10.5%), and Italy (8.6%). Treasury securities are the most prevalent exposure with 65.1% of the fund invested in this sector. The fund invests solely in investment-grade bonds and is currently exposed to those rated AAA (22.4%), AA (32.1%), A (24.0%), and BBB (19.0%).
The effective duration of the fund is 6.7 years, the weighted average maturity is 8.5 years, and the weighted average yield to maturity is 0.85%. The fund uses monthly currency hedging to mitigate fluctuations against the US dollar. There is a total expense ratio of 0.15%.
BATS ETF Marketplace is becoming an increasingly popular listing venue for ETF issuers with WisdomTree recently launching its fourth fund on the exchange. This may partly be explained by a new initiative rolled out whereby rebate incentives are offered to issuers dependent on the level of trading occurring on their ETFs. During October, the four BATS exchanges were responsible for 27.2% of all ETF trading within the US.
iShares, which was the first issuer to list products on BATS, now has 26 ETFs listed on the BATS ETF Marketplace.