BlackRock’s iShares expands fixed income ETF suite in Australia

BlackRock Australia has announced a new fixed income exchange traded fund (ETF) is set to join the ranks of iShares ETFs’ local offering in September.

The iShares 20+ Year U.S. Treasury Bond ETF (AUD Hedged) (ULTB) offers Australian advisers and investors the opportunity to further diversify their portfolio with a unique fixed income option, providing precise exposure to long-end U.S. Treasury bonds.

“We have added ULTB to our local iShares product range, responding to Australian advisers and investor demand for more choice when it comes to precise fixed income exposures,” James Waterworth, Director, Wealth Distribution at BlackRock Australasia, said.

“Bond yields globally are at decade-highs, and if inflation indicators continue to fall, central banks may proceed to cut official cash rates. We believe investors have a window of opportunity to move out of cash and into fixed income exposures to lock in these higher yields,  b because the market has tended to price in changes to cash rates well before they occur.

“This could be achieved by long-end bond exposures like ULTB, which enable Australian investors to add duration in a simple and low-cost way. Alongside our Australian long duration government bond exposure ALTB, we now offer investors one of the broadest ranges of Australian-listed fixed income and cash ETFs available to build a well-diversified fixed income allocation in their portfolios.”

ULTB tracks the ICE US Treasury 20+Year Bond AUD Hedged index, with its duration also offering investors’ portfolios a level of defence against potential market volatility and sluggish growth.

The new fund is also iShares’ longest available duration exposure among its locally listed product suite.

“BlackRock is pleased to now offer access to long-end U.S. Treasury bond exposures, like ULTB, to Australian portfolio builders and investors, bringing one of its flagship exposures to the Australian market,” Tamara Stats, iShares and Index Investments Specialist at BlackRock Australasia, said.

“U.S. Treasury bonds are considered one of the highest quality assets due to their low level of default risk, offering defensive benefits to the broader portfolio. The historic inverse relationship between stocks and bonds has been challenged in recent years. As inflation starts to return to target, we may see the historic correlation restored. Therefore, ULTB could be a very useful tool for portfolio diversification.

“Hedged to the Australian dollar, ULTB also offers Australian investors an additional layer of stability without having to weather the ups and downs of foreign exchange risk.”

ULTB is expected to launch on the Australian Securities Exchange (ASX) in early September, with a management fee of 0.15 per cent.