iShares has announced it is launching two new US fixed income exchange-traded funds (ETFs) following increasing demand for bond funds.

BlackRock claims its ETF platform is the first European ETF to offer exposure to the US high yield market with its two new funds, which will leverage the expertise of its US trading team.

The iShares Markit iBoxx $ High Yield Capped Bond fund is a Dublin domiciled, physically-based ETF listed on the London Stock Exchange (LSE) and will track the performance of the Markit iBoxx USD Liquid High Yield Capped index.

The index constituents are capped with a maximum individual issuer weighting of 3 per cent to ensure diversification across the US high yield market.

In addition, iShares has launched the Barclays Capital US Aggregate Bond fund, which is also listed on the LSE and provides broad based exposure to the US dollar denominated investment grade fixed income market.

The fund, which complements the trading platform’s Barclays Capital Euro Aggregate Bond ETF, will invest directly in government-related, securitised and corporate bonds.

Axel Lomholt, head of ETF products at iShares EMEA, said, ‘We’ve launched these ETFs in response to demand for liquid and transparent fixed income exposures that are easy to buy and trade.

‘Investors this year have also shown a clear preference for physically-based products and for investing through regulated fund vehicles.’

He added, ‘The funds also represent the ongoing expansion of our fixed income range, and complement existing iShares ETFs to provide investors with a choice of building blocks when they are constructing portfolios and allocating to the asset class.’

iShares European fixed income range comprises 43 products and has $30.5 billion assets under management.