BlackRock has launched the iShares AT1 Bond Active Ucits ETF (BAT1), marking the “first” actively managed ETF in Europe focused on additional tier 1 (AT1) bonds.”
The ETF provides exposure to AT1 securities issued by banks to meet regulatory capital requirements, a segment that sits below senior and tier 2 debt in the capital structure and is designed to absorb losses during periods of financial stress.
Additional Tier 1 (AT1) bonds are bank-issued capital instruments designed to absorb losses through write-down or conversion to equity if regulatory capital thresholds are breached.
The offering seeks to generate income by investing primarily in AT1 bonds issued by higher quality bank issuers, typically investment-grade national champion banks.
The fund is managed by BlackRock’s Europe, Middle East and Africa ( Emea) leveraged finance team, which applies bottom-up credit research and quantitative analysis.
BAT1 is listed on Borsa Italiana and Xetra, and carries a total expense ratio of 0.50%.
Fund selectors: We “can’t afford to ignore” active ETFs
“AT1s have become a meaningful part of Europe’s fixed income landscape, offering attractive income potential alongside diversification benefits,” said Jose Aguilar, lead portfolio manager and Emea head of European high yield and long short credit strategies. “Our research-intensive, risk-driven approach aims to capture this elevated income while remaining focused on alpha opportunities and capital preservation.”
“By combining active management with the efficiency of the ETF wrapper, we’re opening the door for investors to access a segment of fixed income that has been historically difficult to reach,” said Vasiliki Pachatouridi, Head of iShares fixed income product strategy Emea at BlackRock. “As demand for innovative fixed income solutions grows, BAT1 provides European investors more choice to build resilient portfolios.”
