FIXED INCOME FOR STRATEGIC ASSET ALLOCATION

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

The challenge

How can I make a strategic global bond allocation at low cost, whilst addressing currency risk?

For EUR-based multi-asset investors seeking to implement broad strategic asset allocation views on global bonds, costs may be an increasingly important consideration. Typically, global bond investors will not want to take global currency risks, therefore a hedged approach may also be required.

The action

By making a long-term allocation to a EUR hedged share class of a global aggregate bond ETF, an investor can access global bond markets across government and corporate sectors, adding diversification to their fixed income allocation whilst maintaining efficient overall portfolio costs.

The outcome

An investor can make a long-term allocation to a EUR hedged share class of a global aggregate bond ETF from 0.10% Total Expense Ratio per annum.¹ This exposure offers access to global bond markets across government and corporate sectors, adding diversification to a fixed income allocation in one trade, whilst maintaining efficient overall portfolio costs. The EUR hedged share class enables the investor to mitigate the currency risks which are inherent in a global bond exposure.

Bloomberg Barclays Global Aggregate Index - Sector breakdown

Source: Bloomberg, Barclays as of 31 August 2020. For illustrative purposes only.

¹ Source: BlackRock as of 31 August 2020 based on the Total Expense Ratio of global aggregate exposure.

Case studies are for illustrative purposes only; they are not meant as a guarantee of any future results or experience and should not be interpreted as advice or a recommendation. Diversification and asset allocation may not fully protect you from market risk. The return of your investment may increase or decrease as a result of currency fluctuations.