iShares Emerging Markets Government Bond Index Class D - Hedged Income (GBP)

Since launch in May 2018, the fund has tracked its benchmark closely. The management tools used by the team have helped to keep performance tight to the index. The team uses currency hedging which means overseas currency bonds are converted back to sterling. By hedging, investors could experience less extreme price movements over time, which could help smooth potential returns. Although, currency hedging is done through derivatives which adds risk.

Given BlackRock's size, experience and expertise running index tracker funds, we expect the fund to continue to track the index well in future, though there are no guarantees.

Tracker funds are one of the simplest ways to invest. The fund aims to match the performance of an index, rather than beat it. Factors like withholding taxes, dealing commissions and spreads, and the cost of running the fund all drag on performance. The team work out the best way to match the performance of the index while keeping costs to a minimum. If the fund's costs are low, it's likely to track the index more closely over time.

This fund invests in almost every bond in the J.P. Morgan Emerging Markets Bond Index Global Diversified Custom Defaults. This is known as partial replication, which could help the fund track the benchmark closely without incurring the cost of holding every bond. It includes bonds with a credit rating below investment grade and some that are unrated (bonds without a credit rating). These bonds are less liquid, meaning they can be more difficult to buy and sell, especially during challenging market conditions or shocks.

The fund can lend some of its investments to others in exchange for a fee in a process known as stock lending. This offsets some of the costs involved with running the fund but adds risk.

Please note as this is an offshore fund you are not normally entitled to compensation through the UK Financial Services Compensation Scheme.