BlackRock has launched a new Australian fixed income ETF with the announcement of iShares Global Aggregate Bond ESG AUD Hedged ETF (AESG).
Priced at 19 basis points (bps), the iShares Global Aggregate Bond ESG AUD Hedged ETF offers Australian investors a simple, low-cost way to access a globally diversified basket of over 21,000 fixed income securities including government, government-related, corporate, securitised, and green bonds. The ETF tracks the Bloomberg MSCI Global Aggregate Sustainable and Green Bond SRI AUD Hedged Index, and offers an improved sustainability profile while matching the currency, sector and maturity composition of the Bloomberg Global Aggregate Index.
The index takes a best-in-class selection approach by incorporating a broad range of ESG and business involvement screens as well as exclusions of issuers with an MSCI ESG rating lower than BBB. Additionally, exclusions to certain sovereign and government-related bonds are also applied based on the UN sanctions list. The index also aims to set an allocation of 10% of its market value to securities classified as green bonds to achieve a measurable environmental impact.
Jason Collins, Head of iShares and Index Investments, BlackRock Australasia, said:
“We’re excited to offer Australian investors a sustainable global aggregate bond exposure via an ETF that is hedged to the Australian dollar and at the low fee of 19 basis points.
“By having the broadest range of fixed income ETFs listed on the ASX, clients have more options in how they decide to allocate fixed income exposures to put more precision into their portfolio.
“As we enter a more volatile macro regime with inflationary pressures expected to persist, investors are demanding higher returns for their fixed income allocations and are increasingly embedding ESG considerations to ensure long-term resilience in their portfolios.”
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Chantal Giles, Head of Wealth, BlackRock Australasia, said, “We saw an opportunity to add to our fixed income ETF range by bringing an Australian dollar-hedged version of our established iShares Global Aggregate Bond ESG ETF.
“As the ESG alternative option to the Bloomberg Global Aggregate Index, AESG offers a diversified global fixed income investment grade-rated portfolio building block with improved sustainable characteristics.
“Clients are looking to embed ESG considerations into their fixed income sleeve in the same way they approach their equity exposures, and they are increasingly transitioning to index fixed income allocations to implement their sustainability preferences. ETFs are efficient tools in that sense as they offer the transparency, liquidity, diversification, and ease of access, giving clients the conviction to use those securities.”
