In a move that will help satisfy increasing demand for globally diversified fixed income solutions, BlackRock launched the iShares Global Government Bond USD Hedged Active ETF (NYSE:GGOV), the industry’s first and only actively managed ETF providing USD-hedged exposure to global government bonds.
The fund is billed as a game changer for fixed-income investors who wish to lower risk and pursue higher yields overseas, minus the headache of currency risk.
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The fund carries an expense ratio of 0.39%, and follows the Bloomberg Global Treasury USD Hedged Index as its benchmark.
Tom Becker, lead portfolio manager of GGOV, explained that USD-hedged global government bonds in the past have returned more with less volatility than similar U.S.-only bond indices.
“We believe that GGOV will be an important tool for many U.S. asset allocators in the current environment of elevated inflation, large budget deficits, and rising issuance,” he added.
What Makes GGOV Different?
The ETF aims to solve an expanding sore point: overexposure to long-dated U.S. Treasuries, which most investors view as increasingly at risk in the face of fiscal turmoil. GGOV’s worldwide strategy, underpinned by a currency hedge, aims to increase yields and lower risk when U.S. interest rates outstrip international counterparts.
GGOV comes to the market at the right time when investors are reassessing their bond exposures following global rate changes and ongoing inflation. By blending active alpha creation with a USD hedge, BlackRock is designed to offer both defense and diversification.
GGOV also joins BlackRock’s growing empire of fixed income ingenuity as the newest member of its $52 billion U.S. active ETF platform and plays a part in its enormous $1 trillion global bond ETF franchise.
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