BlackRock Launches New Global Government Bond Hedged ETF
- GGOV is joining BlackRock’s $52 billion-plus U.S. active ETF platform.
- The new ETF may help investors limit some of the risk they’d see with a portfolio of only U.S.-focused fixed-income investments.
BlackRock launched a new exchange-traded fund Thursday designed to offer investors exposure to a globally diversified portfolio of government bonds.
The iShares Global Government Bond USD Hedged Active ETF (GGOV) uses a currency hedge on the non-U.S. bonds that seeks to raise the yield on those exposures when the U.S. policy rates are elevated relative to their global counterparts, according to a press release.
GGOV is managed by the BlackRock Tactical Asset Allocation team, and its benchmark index is the Bloomberg Global Treasury USD Hedged Index. The expense ratio is 0.39%.
GGOV: Global Government Bonds With a Hedge
USD-hedged global government bonds have historically produced higher yields with lower volatility versus comparable U.S.-only bond indices, Tom Becker, lead portfolio manager of GGOV, said via the press release.
BlackRock determined that this type of diversified global fixed-income exposure—particularly with a foreign exchange (FX) hedge where there is pure exposure to a diversified set of sovereign issuers across the world—would be an attractive access point for a lot of investors who have a large home bias, Becker told etf.com.
The firm saw that it could “combine what would be a differentiated benchmark and starting point with a strong experience of delivering alpha for clients,” he said.
There's also much more concern now about the size of the government deficits and inflation, Becker added. GGOV may help investors limit some of the risk they’d see with a portfolio of only U.S.-focused fixed-income investments.
The Growth of the Fixed-Income ETF Market
BlackRock's iShares global fixed-income ETF business hit the $1 trillion mark in September 2024 as the Federal Reserve’s earlier rate hikes had investors turning to bonds. GGOV is joining BlackRock’s $52 billion-plus U.S. active ETF platform.
The world’s largest asset manager is expecting the fixed-income ETFs overall to reach $6 trillion in assets under management by 2030, if not sooner, according to its annual outlook published in April.
