Fund manager BlackRock’s iShares arm has launched a new exchange traded fund (ETF) investing in global bonds and offering investors exposure to fixed income indices.

Blackrock says the iShares Global Aggregate Bond UCITS ETF (AGGG) is a way to achieve diversified exposure to investment grade bonds, spread across currency, region and sector.

The fund holds the underlying bonds of the index, rather than applying synthetic replication, and has a total expense ratio of 0.1%. The fund launches with currency-hedged share classes, including US Dollar, Sterling and the Euro.

The fund tracks the Bloomberg Barclays Global Aggregate Index - a measure of global investment-grade debt from 24 local currency markets that is widely followed, says the company. The index provides exposure to treasuries, government-related, corporate and securitised fixed-rate bonds from both developed and emerging markets companies.

Brett Olson, head of iShares Fixed Income EMEA, said: “Investors are increasingly diversifying their bond allocation to protect their portfolios from potential sudden market moves. This ETF provides access to broad fixed income exposure meaning investors can avoid the time and resource-consuming task of picking out individual bonds.

“As the broader fixed income market continues to evolve, investors are increasingly seeking the diversification and flexibility that ETFs can offer, and using them alongside traditional security selection.”

A recent survey by KPMG found that 60% of the wealth managers and advisers polled used fixed income products in portfolio construction, says Blackrock, and to date approximately £107bn has been invested globally in bond ETFs.

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