BlackRock’s London-based exchange-traded funds platform iShares has launched a Global Government AAA-AA Capped Bond fund, the first ETF to offer global AAA or AA rated government bond exposure. 

Listed on the London Stock Exchange, the new fund invests in fixed-rate local currency bonds, issued by developed countries worldwide, rated AA3 or higher, using the median of ratings given by credit-rating agencies Fitch, Moody’s and Standard & Poor’s. The fund is physically-backed and has a total expense ratio of 0.20 per cent.

No AAA rated country accounts for more than 20 per cent of the fund and no AA rated country accounts for more than 10 per cent. At 31 August 2012 the index contained bonds issued by 19 countries denominated in 13 currencies.

“By designing this global product, including issuers such as the Nordic countries, Australia and Singapore, we are offering access to some of the highest-quality government-issued bonds throughout the global economy in one single, cost efficient, fund,” Alex Claringbull, senior fixed income portfolio manager for iShares fixed income range, said in a statement.

iShares currently offers 56 fixed-income ETF products.