iShares continues expansion of fixed income range

iShares, the world's number one provider of Exchange Traded Funds (ETFs) managed by Barclays Global Investors, has launched two new fixed income ETFs, further expanding its product range and providing investors the opportunity to diversify their exposure to new markets.

The iShares Global Inflation-Linked Bond provides investors with exposure to the Barclays World Government Inflation-Linked Bond Index, and gives investors a degree of protection against global inflation in a single trade. The index currently consists of 90 bonds representing 10 different countries and seven different currencies.

The iShares Global Inflation-Linked Bond complements iShares' existing range of inflation-linked products, made up of:

iShares € Inflation-Linked Bond
iShares £ Index-Linked Gilts
iShares $ TIPS

The iShares € Covered Bond provides investors with liquid exposure to a range of European covered bonds based on the Markit iBoxx € Covered index. There are currently 448 bonds in the index, 93 per cent of which are AAA-rated, with an average annual yield of 5.25 per cent and duration of 4.25 years (as at 30 June 2008). Covered bonds are securities issued by financial institutions which have a "cover pool" of collateral to act as a credit enhancement giving them a higher rating than standard bonds of the same institution.

Commenting on the launch of the funds, Alex Claringbull, senior fixed income portfolio manager, iShares said: "These new funds are ideally suited to today's economic climate as investors return to safety in the face of volatile market conditions - and they offer this safety in the transparent, liquid and diversified structure of an ETF."

"Rising inflation is a major concern for investors, and we're anticipating increased demand from investors for inflation-linked ETFs as they look to protect their investments from this pressure. iShares already has a strong range of market-leading inflation linked products, and this global product complements our suite by providing investors the opportunity to invest in inflation-linked bonds from around the developed world in a single trade."

"The covered bond market, is the fourth biggest bond market in Europe after German, French and Italian sovereigns, offers investors a high level of liquidity. Covered bonds also offer an attractive yield pick-up over sovereign, supranational and agency bonds.

"The iShares € Covered Bond enables holders to invest into an increasingly important diversifying asset class without diluting the overall credit quality of their portfolio, and offers investors greater security as holders have a preferential claim on a legally segregated pool of collateral assets."

These launches take the total number of iShares ETFs listed on the London Stock Exchange to 64, and boosts the number of iShares ETFs available throughout Europe to 144, reinforcing iShares position as the UK's and Europe's leading provider of ETFs.