iShares launches first euro high-yield bond ETF

*Fund gives exposure to almost 100 corporate bonds

*Intended to improve access to market

LONDON, Sept 6 (BestGrowthStock) – iShares, the exchange-traded
funds (ETF) operator owned by BlackRock (BLK.N: ), said on Monday
it had launched a fund that will provide investors with easier
access to the European high-yield bond market.

The fund, the first of its kind in the world, addresses some
of the liquidity issues in a market that has traditionally been
hard to access, said BlackRock fixed-income strategist Blanca
Koenig.

It will offer exposure to nearly 100 of the most liquid sub-
investment-grade corporate bonds.

Flows into high-yield bond funds based in Europe have been
strong over the year to end-June, with net sales at 20 billion
pounds ($30.7 billion) for the sector as whole, dominated by
U.S. and global high-yield products, according to data from
Lipper FMI.

Net sales of European and UK high-yield funds were about 5
billion pounds in the same period. Global high-yield inflows
accounted for 16 percent of all sales of fixed-income funds in
the year to June, Lipper added.

ETFs are baskets of assets, such as stocks, bonds or
commodities, that trade on stock exchanges, but have only
existed in Europe for about 10 years. They were first launched
in Canada in 1990 before arriving in the United States.

Unlike traditional mutual funds, ETFs can be bought and sold
throughout the day like stocks and are also attractive to
investors because they have lower fees and tax advantages
compared with mutual funds.

iShares has teamed up with Markit, which owns and manages
the iBoxx Euro High Yield index of which two-thirds of
constituent bonds are rated BB and just 5 percent at the more
riskier CCC rating.

Koenig said the index complements BlackRock’s existing range
of physically backed fixed-income ETFs.

Money manager BlackRock acquired asset manager Barclays
Global Investors last December for about $14 billion, mainly for
the iShares business [ID:nL633576].

BlackRock said in July that the iShares deal had enabled it
to attract new client money, with around half of the $28.4
billion of inflows in the second quarter coming from iShares
investors [ID:nN21270365].

JP Morgan Asset Management said high-yield bonds, along with
high-dividend equities and convertible bonds, could continue to
offer good yields while government bond yields hit record lows.

“High yield debt, in particular, is offering attractive
spreads in comparison to government bonds,” said Dan Morris,
market strategist at J.P. Morgan AM.

Spreads on high-yield bonds are currently around 707 basis
points over government bonds, compared with 269 basis points for
emerging markets and 179 basis points for investment-grade
bonds, JP Morgan added.

“With corporate balance sheets looking robust, and cash
generation strong, companies should have little difficulty in
meeting debt repayments,” Morris said.

($1=.6511 Pound)

(Additional reporting by Joel Dimmock; Editing by Erica
Billingham)

iShares launches first euro high-yield bond ETF