BlackRock repackages income strategy in active ETF format

BlackRock Australia has signalled its commitment to growing its suite of active exchange traded funds (ETFs) under its iShares banner, with a new ‘income-focused’ product expected to launch on the Australian Securities Exchange (ASX) later this month.

The iShares Credit Income Active ETF (ICME) seeks to deliver investors regular and stable monthly income with the benefits of daily ASX liquidity, with returns expected above the Reserve Bank of Australia (RBA) cash rate.

The fund’s portfolio offers exposure to Australian investment-grade issuers across a range of sectors, as well as opportunities in subordinated (Tier 2) and senior credit. The manager confirmed ICME is designed to “complement” investors’ existing exposure to higher-risk credit and fixed interest strategies.

“After years of low rates, yields have reset higher. ICME is designed to help investors navigate the transition in the market with the phasing out of bank hybrid securities and those seeking an easy-to-understand higher-income product,” Katherine Palmer, Head of Fixed Income and Credit Product Strategy, Australia at BlackRock, said.

“The Australian credit market continues to deepen and broaden, with more issuers opting for local issuance rather than offshore. This trend creates a diverse set of opportunities for the portfolio.”

Leveraging the combined decades of experience of its portfolio management team – including Navin Saigal, Head of Global Fixed Income for Asia Pacific; Craig Vardy, Head of Australia Fixed Income; and Cameron Garlick, Director, Global Fixed Income Australia – the ETF is supported by BlackRock’s research-backed investment process and tech-informed risk management framework.

The launch of ICME comes in the wake of BlackRock’s unveiling of its first active ETF in the local market earlier this year, the iShares U.S. Factor Rotation Active ETF (IACT).

“Active ETFs are reshaping how investors access fixed income. With the launch of IACT earlier this year and now ICME, we’re expanding access to BlackRock’s active investment expertise in Australia while delivering the transparency and efficiency iShares is known for,” Steve Ead, Head of Global Product Solutions, Australasia at BlackRock, said.

“Despite bond ETFs growing to roughly US$2.7 trillion globally, they still account for only about 2% of the approximately US$140 trillion bond market3—underscoring the opportunity ahead. ICME combines active management with iShares’ scale and innovation to help meet evolving investor needs.”