iShares $ Treasury Bond 20+yr UCITS ETF GBP Hedged (Dist)

Issuer: iShares

Asset Class: Fixed Income

TER: 10bps

Trading Currency: GBP

Pays Income: False

Listing Date: 22 Nov 2019

Ticker: IDTG

ISIN: IE00BK5MT033

This investment product provides targeted exposure to long-dated U.S. government debt by investing in U.S. Treasury bonds with remaining maturities of twenty years or more. These bonds are considered among the highest credit quality assets globally, backed by the full faith and credit of the U.S. government. The fund aims to replicate the performance of an index composed of these long-term government securities, offering a direct and efficient way to invest in this specific segment of the fixed income market. The underlying bonds are physically held, providing direct ownership.

The product is particularly sensitive to changes in long-term interest rates, a characteristic known as high duration. When long-term rates are expected to fall, the value of these bonds tends to rise, offering potential for capital appreciation. Conversely, it faces significant risk if rates rise. This type of fund is often used by investors to diversify portfolios, hedge against economic downturns as U.S. Treasuries are seen as a safe-haven asset, or to express a specific view on the future direction of U.S. monetary policy and inflation expectations.

A key feature of this particular share class is its built-in currency hedging mechanism. It is designed to minimise the impact of fluctuations between the U.S. dollar, the currency of the underlying bonds, and the British pound. This is beneficial for investors who want to isolate their returns to the performance of the U.S. Treasury bonds themselves, without taking on the additional risk from foreign exchange movements. The fund also distributes any income generated from the bond holdings on a semi-annual basis.