BlackRock has launched a new fixed income ETF in Europe providing exposure to US dollar-denominated corporate bonds from issuers domiciled in the Asia ex-Japan region. The fund becomes the cheapest ETF in Europe to target USD investment-grade corporate bonds from issuers in the Asia ex-Japan region.
Source: Original Postress-this.php?">BlackRock launches Asia ex-Japan USD investment-grade corporate bond ETF
The fund becomes the cheapest ETF in Europe to target USD investment-grade corporate bonds from issuers in the Asia ex-Japan region.
The iShares $ Asia Investment Grade Corp Bond UCITS ETF (ASIG NA) has been listed on Euronext Amsterdam and comes to market with approximately $90 million in assets.
ASIG is linked to the iBoxx USD Asia ex-Japan Corporates Investment Grade ESG Screened Index which consists of investment-grade bonds with at least one year remaining to maturity, and a minimum amount outstanding of $300m.
To be eligible for inclusion in the index, a bond must have known cash flows, which includes instruments such as fixed-coupon bonds, zero-coupon bonds, and callable and puttable bonds. Floating-rate bonds and inflation- and other index-linked bonds, among others, are explicitly excluded.
The index construction methodology harnesses the capabilities of ESG analytics firm Sustainalytics to remove proven violators of UN Global Compact principles and issuers embroiled in severe ESG-related controversies or with business operations linked to controversial weapons, conventional weapons, oil sands, thermal coal, and tobacco.
Constituents are weighted by market value while capping any single issuer at 4% at rebalance. Rebalancing occurs on a monthly basis.
As of 16 November, well over half (57.4%) of the index weight was allocated to bonds from mainland China issuers with the next-largest country exposures being Hong Kong SAR (10.5%), South Korea (8.2%), India (4.6%), and Indonesia (4.3%).
The index is tilted towards bonds at the lower end of the investment-grade spectrum with issues rated BBB making up 50.8% of the fund by weight and issues rated A contributing 42.2%. The remainder of the index is presently allocated to bonds rated AA.
Notable positions include Tencent (4.1%), Alibaba (3.0%), Pertamina Persero (2.9%), CNOOC Finance (2.1%), and CNAC HK Finbridge (1.8%).
The index is currently yielding 2.61% and has an effective duration of 5.22 years.
The ETF comes with an expense ratio of 0.20% which is ten basis points cheaper than the $20m Xtrackers USD Asia ex-Japan Corporate Bond UCITS ETF (ALQD LN), the only other Europe-listed ETF to target USD investment-grade corporate bonds from the Asia ex-Japan region