BlackRock launches range of European debt funds

BlackRock has launched eight exchange-traded funds (ETFs) investing in the sovereign debt of single European countries, at a time when the future of the eurozone is in deep crisis.

The firm's new range of eight iShares ETFs offers access to the government debt of countries, including troubled Spain as well Germany, France and Italy.

Axel Lomholt at BlackRock says that with so much uncertainty over the future of the eurozone, these ETFs give investors access to European debt markets on an individual country level.

"There isn't one product for all scenarios, so we have decided to give investors the building blocks for Europe," says Mr Lomholt.

ETFs are funds which can be bought or sold like shares through a stockbroker, at a low cost. Unlike actively-managed funds, ETFs do not have a fund manager to stock-pick. Instead, ETFs invest in a broad index. The new iShares buy the fixed-rate debt of the individual governments, based in euros.

But investors need to be aware of the risks. Ben Seager-Scott at Bestinvest says: "With Europe in the middle of a debt crisis, European bonds are a lot more uncertain than they were before. While there could be attractive opportunities, there is a genuine risk of the euro collapsing and some countries defaulting – not paying their debtors back."

Dave Fishwick of M&G Investments branded Western government bonds as: "deeply unattractive and investors are not being paid adequately for sovereign risk in the eurozone".