The new iShares UCITS ETF will provide exposure to US dollar denominated floating rate bonds, which offers coupons that adjust to reflect changes in interest rates unlike traditional bonds.
It has a total expense ratio of 0.10% and is physically-replicating.
“Concerns about rising rates have prompted many investors to consider moving out of longer-duration bonds,” said Brett Pybus, head of iShares EMEA fixed income strategy at BlackRock.
“This fund provides investors with a way to reduce duration and protect portfolios against periods of rising interest rates.”
The new ETF provides investors with exposure to investment grade bonds or higher that have a maturity of five years or less and also “offers an attractive yield compared with money market funds,” according to Pybus.
“Our focus continues to be on developing a broad and granular range of ETFs that help investors build precise and cost efficient portfolios, and this fund is testament to that,” he added.