iShares J.P. Morgan USD Asia Credit Bond Index ETF

Risk Classification: 3 – Balanced

Price per Unit (29 Mar 16): 10.58 [USD]

Dividend Yield: 4.16%

Expense Ratio: 0.32%

Please refer prospectus for detailed risk disclosure

Investment Rationale:

This ETF broadly tracks the Asian Credit markets investing in both investment grade and high yield bonds. Asia as a region has robust fundamentals with positive long term economic growth prospects with favorable demographics, strong sovereign balance sheets, high personal savings rates and trade competitive advantages. At the same time, Asia as a region needs capital for investment into infrastructure and capital spending. This creates a favorable market for Asian issuers to raise capital and we have seen good returns from this asset class. Although we see near-term headwinds from China due to rapid debt build-up in the corporate sector, overall we feel that this is not enough to cause a systemic risk event. Valuations are attractive.

Below Chart Shows the Asian Credit Spread Index:

asian credit spreads

Fundamental Risk to investment:

This ETF will sharply sell off in the event of a sharp widening in credit spreads in Asian credit and/or a sharp sell-off in US Treasuries. Neither are base case expectations.

Details of ETF:

Details on iShares website – For Live data and Prospectus