BlackRock Australia has released its fourth government bond exchange traded fund (ETF) with the launch of a new vehicle which offers exposure to long-duration Australian Treasury and semi-government bonds.
The iShares 15+ Year Australian Government Bond ETF (ASX code ALTB) will carry a management fee of 0.15 per cent and as it was benchmarked to the Bloomberg AusBond Govt 15+ Year Index will provide the longest duration exposure available within the Australian iShares product range.
BlackRock Australasia head of wealth Chantal Giles said the introduction of ALTB provided investors with more precise fixed income exposures and was suitable for those seeking portfolio diversification as long-duration bonds can serve as a hedge during equity market downturns.
“We expect ALTB to be a complementary exposure for advisers and clients looking to access a high-quality diversification option that will add defensive benefits to their whole portfolios. The transparency, liquidity, and portfolio efficiency of the bond ETF structure also allows for precise allocation between Australian and global interest rate regimes,” Giles said.
BlackRock Australasia iShares and Index Investments Specialist Tamara Stats added the new fund was also useful for those looking to mitigate interest rate changes.
“With interest rates expected to remain higher for longer in Australia, it is pertinent for multi-asset investors to consider adding more specific parts of the yield curve within their fixed income allocations. The addition of a long-duration exposure like ALTB can be particularly relevant for those positioning for lower term rates,” Stats said
“ALTB offers exposure to a portfolio of long-duration AAA-rated bonds, which have a track record of performing well when there’s an anticipation of falling Australian interest rates. With a yield between 4.5-5 per cent so far this year, the Bloomberg AusBond 15+ Year Index also offers a regular source of income for investors.”
The new fund is in addition to the US Treasury, Australian Treasury and Australian inflation linked bond funds which are part of the suite of 11 fixed income ETFs available via Blackrock and expands it total number of ETFs in the local market to 51 and follows the recent release of an emerging markets ETF.
