The ETF offers clients an alternative to traditional high quality fixed income investments such as government bonds.
BlackRock launched a tracker (“Exchange-Traded Fund” or ETF) investing in the debt of multilateral development banks (“Multilateral development bank” or MDB).
The ETF offers clients an alternative to traditional high quality fixed income investments such as government bonds. MDB debt offers solid credit ratings – often AAA, high liquidity and higher yield than US Treasuries. Funds raised by MDB debt are also used to advance the United Nations Sustainable Development Goals (UN SDGs).
The iShares USD Development Bank Bonds UCITS ETF tracks the FTSE World Broad Investment Grade USD MDB Bond Capped Index. The index offers exposure to debt securities denominated in US dollars issued by the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, the International Development Association and the International Bank for Reconstruction and Development and the International Finance Corporation (IFC) of the World Bank Group. Each issuer has the AAA credit rating of at least one major rating agency, counts the United States as a member, and is committed to supporting the core United Nations SDGs.
BlackRock partnered closely with UBS during this launch. Backed by UBS initial seed capital, the ETF currently has assets of more than USD 120 million and a total expenditure ratio (TER) of 0.15%.
“More and more clients are using fixed income ETFs for efficient and low cost access to specific asset classes,” commented Brett Olson, head of iShares fixed income securities in EMEA for BlackRock. “As investors seek to diversify their bond portfolios, the debt of multilateral development banks can be a liquid substitute for other premium credit risks in their asset allocation.”
“Our clients see the debt of development banks as an attractive way to diversify their portfolios and focus them on the sustainable development goals of the United Nations,” added Mark Haefele, Chief Investment Officer at UBS Global Wealth Management. “Exchange-traded funds will continue to be an important means for clients to access this growing asset class.”