Exchange traded fund (ETF) provider iShares has launched three currency-hedged bond funds which invest in a sample of the securities in the indices they track. iShares has launched the funds because investors are diversifying their fixed-income allocations globally at the same time as volatility has increased in foreign exchange markets.
Stephen Cohen, head of investment strategy at iShares, anticipates that one of the key risks in fixed income in the second half of this year will be currency movements, as well as duration risk. Emerging market currencies have been particularly volatile.