BlackRock launches industry firsts in sustainability with expansion of iShares fixed income ETF range

Helsinki, 9 April 2021 – As the adoption of fixed income UCITS ETFs within the bond market ecosystem accelerates, BlackRock continues to expand its range of ETFs and index solutions to help clients navigate market conditions and to support their transition to more sustainable portfolios.

Increasing choice in sustainable fixed income investing

BlackRock has today launched its first iShares € Green Bond UCITS ETF (GRON) and the industry’s first iShares Global Govt Bond Climate UCITS ETF (CGGD). 

The iShares € Green Bond UCITS ETF is designed to provide investors with an additional building block as they look to align their portfolios with a net zero pathway. It tracks the Bloomberg Barclays MSCI Euro Green Bond SRI including Nuclear Power Index offering exposure to over 300 EUR-denominated investment grade green bonds from 160 issuers across four sectors of the fixed income market. The primary purpose of a green bond is to raise capital and investment for projects with environmental benefits, such as renewable energy, green buildings, wastewater management, energy efficiency, and public transport.

The transparency afforded to green bond investors via impact reporting is a unique feature of the fund, and BlackRock will publish proprietary portfolio impact reports on the environmental benefit of the underlying holdings. TheFundfurther screens out securities involved in certain business activities such as controversial weapons and nuclear weapons as well as those associated with major ESG controversies.

The iShares Global Govt Bond Climate UCITS ETF offers investors cost effective exposure to government bonds whilst incorporating climate risk. The new Fund tracks the FTSE Advanced Climate Risk Adjusted World Government Bond Index and offers exposure to global government bonds, taking the FTSE World Government Bond Index ("WGBI") as a starting point. The index adjusts country weights based on a forward-looking assessment of climate risk faced by sovereigns using three pillars; physical risk, transition risk and resiliency to climate change.

This new Fund complements the existing iShares € Govt Bond Climate UCITS ETF, the first European domiciled climate government bond UCITS ETF launched in October 2020, which includes countries within the European Monetary Union. These products provide clients with robust solutions to address climate risk within their government bond allocation and the flexibility to gain diversified exposure to investment grade Eurozone or global government bonds.

Today’s launches support BlackRock’s expectation that 70% of its fund launches and repositionings in Europe will be Article 8 or 9 under the European Union’s Sustainable Finance Disclosure Regulation (SFDR). The iShares € Green Bond UCITS ETF is categorised as Article 9 and the iShares Global Govt Bond Climate UCITS ETF is categorised as Article 8.

Elisabeth Sterner, Head of iShares & Wealth in Nordics for BlackRock said: “We are committed to helping investors build sustainable portfolios that align with their specific goals. The AUM of our iShares EMEA fixed income range has grown by around 29% in the past year, as investors are increasingly using them as transparent, efficient building blocks to access the bond market sustainably”.

Achieving greater granularity in emerging markets through ETFs

Emerging market debt may play a bigger role in investor portfolios in 2021 as the role of traditional fixed income becomes increasingly challenged. BlackRock has extended its flagship emerging markets fixed income range with the launch of the iShares J.P. Morgan $ EM Investment Grade Bond UCITS ETF (IGEM).

The iShares J.P. Morgan $ EM Investment Grade Bond UCITS ETF provides exposure to USD-denominated government bonds issued by investment grade rated emerging market countries. BlackRock now offers 11 iShares Emerging Market funds with over US$30bn in assets, offering diversified exposure to over 70 countries, including sustainable options.

Sterner added: “Emerging markets is one of the few asset classes offering attractive yield and presenting relative value versus other asset classes in our view. As investors seek to address the strategic portfolio construction challenges they face, we will continue to expand our range to provide investors with the tools they require to navigate different pockets of the fixed income market.”

Overview of new funds

Fund	TER	Index	Listing exchange	Ticker
iShares € Green Bond UCITS ETF	20bps	Bloomberg Barclays MSCI Euro Green Bond SRI including Nuclear Power Index	Xetra	GRON
iShares Global Govt Bond Climate UCITS ETF	20bps	FTSE Advanced Climate Risk Adjusted World Government Bond Index	Euronext	CGGD
iShares J.P. Morgan $ EM Investment Grade Bond UCITS ETF	30bps	J.P. Morgan EMBI Global Diversified Investment Grade	Euronext	IGEM

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About iShares

iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, a global line-up of 900+ exchange traded funds (ETFs) and $2.67 trillion in assets under management as of December 31, 2020, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock.

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Product Risks

iShares € Green Bond UCITS ETF EUR

Counterparty Risk, Credit Risk, Environmental, Social and Governance (ESG) Risk, Liquidity Risk

iShares Global Govt Bond Climate UCITS ETF USD

Counterparty Risk, Credit Risk

iShares J.P. Morgan $ EM Investment Grade Bond UCITS ETF USD
Counterparty Risk, Credit Risk, Emerging Market Government Fixed Income Securities Risk, Emerging Markets Risk

 

Description of Product Risks

Counterparty Risk

The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Share Class to financial loss.

Credit Risk

The issuer of a financial asset held within the Fund may not pay income or repay capital to the Fund when due.

Emerging Markets Risk

Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund.

Emerging Market Government Fixed Income Securities Risk
Fixed income securities issued or guaranteed by government entities in emerging markets generally experience higher ‘Credit Risk’ than developed economies.

Environmental, Social and Governance (ESG) Risk

The benchmark index only excludes companies engaging in certain activities inconsistent with ESG criteria if such activities exceed the thresholds determined by the index provider. Investors should therefore make a personal ethical assessment of the benchmark index’s ESG screening prior to investing in the Fund. Such ESG screening may adversely affect the value of the Fund’s investments compared to a fund without such screening.

Liquidity Risk

Lower liquidity means there are insufficient buyers or sellers to allow the Fund to sell or buy investments readily.

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iShares plc, iShares II plc, iShares III plc, iShares IV plc, iShares V plc, iShares VI plc and iShares VII plc (together 'the Companies') are open-ended investment companies with variable capital having segregated liability between their funds organised under the laws of Ireland and authorised by the Central Bank of Ireland.

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This document is directed at 'Professional Clients' only within the meaning of the rules of the Financial Conduct Authority. Some of the funds mentioned in this document are not registered for public distribution in the UK. In respect of these funds, this document is intended for information purposes only and does not constitute investment advice or an offer to sell or a solicitation of an offer to buy the funds described within and no steps may be taken which would constitute or result in a public offering of the funds in the UK. This document is strictly confidential and may not be distributed without authorisation from BlackRock Advisors (UK) Limited. Any decision to invest must be based solely on the information contained in the Company’s Prospectus, Key Investor Information Document and the latest half-yearly report and unaudited accounts and/or annual report and audited accounts. Investors should read the fund specific risks in the Key Investor Information Document and the Company’s Prospectus.

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