iShares has launched an exchange-traded fund that offers physical corporate bond exposure and mitigated interest rate risk in a single fund.
The iShares Barclays Capital Euro Corporate Bond Interest Rate Hedged fund, hedges out the inherent interest rate risk using German government bond futures. The target duration is zero.
Alex Claringbull, senior fixed income portfolio manager for BlackRock’s iShares fixed income range, says the fund buys physical corporate bonds, and sells German government bond futures against those purchases, offering isolated credit exposure that allows investors to earn the extra corporate bond yield they are seeking.
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