iShares launches local currency emerging market debt ETF

iShares, the Exchange Traded Funds (ETF) platform of BlackRock, Inc. today expanded its fixed income range with the launch of the iShares Barclays Capital Emerging Market Local Govt Bond fund, listing on the London Stock Exchange

Many emerging market governments issue debt in two forms, US dollar denominations and local currency denominations, which have different yield and risk profiles. The new iShares fund offers access to the fixed-rate debt of emerging market governments which is denominated in their local currencies. The fund invests in physical bonds and provides investors with diversified exposure to a sector which can be difficult and costly to capture directly.

The iShares Barclays Capital Emerging Market Local Govt Bond fund extends iShares’ European fixed income range to 43 funds with a total of USD 30 billion in assets under management. It specifically complements the iShares JPMorgan $ Emerging Market Bond fund, offering investors greater choice in the way they invest in fixed income and in emerging market sovereign debt in particular.

Axel Lomholt, head of product development for iShares EMEA said: “We have seen sustained demand from investors for an effective way to access local currency emerging market bonds. Two reasons for this demand are the high yield of these bonds and the currency potential. Over the past two years, many of the emerging market currencies appreciated versus hard currencies like the US-Dollar, Euro or Sterling. Local currency bonds can be an effective way for investors to benefit from this appreciation.

“The iShares Barclays Capital Emerging Market Local Govt Bond fund meets this demand by providing investors with liquid and diversified exposure to the debt of eight emerging nations in a single trade. As with all iShares funds, there is also full and daily transparency into the underlying bonds.”