BlackRock has launched two new fixed income ETFs in Europe providing broad exposure to high yield corporate bonds issued in US dollars or euros.
The new listings are priced at half the cost of BlackRock’s seasoned high yield corporate bond ETFs.
The iShares Broad $ High Yield Corp Bond UCITS ETF has been listed on London Stock Exchange in US dollars (HYUS LN) and on Xetra in euros (UDHY GY).
The fund has come to market with $50 million in assets.
The iShares Broad € High Yield Corp Bond UCITS ETF, meanwhile, has been listed solely on Xetra in euros (EH1Y GY) with €30m in initial assets.
The funds are very similar to seasoned USD and EUR high yield corporate bond ETFs offered by BlackRock, namely the $3.7 billion iShares $ High Yield Corp Bond UCITS ETF (IHYU LN) and €4.7bn iShares € High Yield Corp Bond UCITS ETF (IHYG LN).
One of the most fundamental differences between the new and old listings is their price with the new ETFs having expense ratios of 0.25%, half the cost of the seasoned funds.
The new ETFs also track indices developed by ICE Indices, namely the ICE BofAML US High Yield Constrained Index and ICE BofAML Euro High Yield Constrained Index, whereas IHYU and IHYG are linked to Markit indices.
Similar to the Markit indices, the ICE indices cover USD- or EUR-denominated high yield bonds issued by developed market corporate issuers. Eligible issues must have at least 18 months remaining to final maturity and exceed minimum thresholds for par amount outstanding.
Whereas the Markit indices cover bonds issued globally, however, the ICE USD index specifically targets bonds issued in the US domestic bond market, and the ICE EUR index focuses on bonds issued in the eurozone or in Eurobond markets.
Constituents are weighted by market value while applying issuer caps of 2% and 3% for the USD and EUR indices, respectively.