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Blackrock Expands Menu of Bond ETFs
February 17, 2012
Blackrock, sponsor of the iShares ETFs, unveiled seven bond ETFs focused on various sectors within the fixed income market. Among this group are bond ETFs targeting corporate bonds issued by financial (NYSEArca: XLF), industrial (NYSEArca: XLI) and utility companies (NYSEArca: XLU) along with a fund that screens for A-rated U.S. corporate bonds.
"For the first time, investors and advisors can fine tune sector exposure in their fixed income portfolios just like they have done in their equity portfolios," said Matt Tucker, Head of iShares Fixed Income Investment Strategy at BlackRock. "Now they can overweight and underweight sectors and do sector rotation to capture bond sector returns over business cycle changes."
Here’s a snapshot of the new iShares bond ETFs:
• iShares Aaa – A Rated Corporate Bond Fund (NYSEArca: QLTA) – The first ETF to provide single-trade access to the highest quality corporate debt issuers, broadly diversified across sectors and maturities. The fund is designed to track the Barclays Capital U.S. Corporate Aaa – A Capped Index
• iShares Barclays U.S. Treasury Bond Fund (NYSEArca: GOVT) – Offers exposure to a broad range of U.S. Treasuries maturities (1-30 years) in one trade. Designed to track the Barclays Capital U.S. Treasury Bond Index, the new fund allows investors to shift towards U.S. Treasuries in times of negative market sentiment.
• iShares Barclays CMBS Bond Fund (NYSEArca: CMBS) – The first ETF to provide exposure to investment grade commercial mortgage-backed securities. The new iShares ETF can complement the iShares Barclays MBS Bond Fund (NYSE: MBB) and help investors express tactical views on the commercial real estate market.
• iShares Barclays GNMA Bond Fund (NasdaqGM: GNMA) – The first ETF to offer a flexible and cost-efficient way to invest in a diversified portfolio of fixed-rate, mortgage-backed securities issued by the Government National Mortgage Association (GNMA). GNMAs are the only mortgage securities explicitly supported by the full faith and credit of the U.S. government.
• iShares Financials Sector Bond Fund (NYSEArca: MONY) – The first ETF to offer targeted exposure to investment grade U.S. corporate financial sector bonds. Today 33% of the U.S. corporate bond market comprises financials sector bonds. The new fund is designed to track the Barclays Capital U.S. Financial Institutions Capped Bond Index.
• iShares Industrials Sector Bond Fund (NYSEArca: ENGN) – The first ETF to express a view on the industrial sector, which comprises 56% of the U.S. corporate bond market. The new fund is designed to track the Barclays Capital U.S. Industrial Bond Index.
• iShares Utilities Sector Bond Fund (NYSEArca: AMPS) – The first ETF to provide a flexible and cost-efficient way to express a view on the U.S. utility corporate bond sector. It is designed to track the Barclays Capital U.S. Utility Bond Index.
According to BlackRock Investment Institute's ETP Landscape, global flows into fixed income ETFs reached record levels in January 2012 by attracting $9 billion in net new assets, up from the previous monthly record set of $6.7 billion set in January 2009.
Other Launches Target Energy and Inflation
Van Eck Global introduced a new fund that targets the energy sector called the Market Vectors Unconventional Oil & Gas ETF (NYSEArca: FRAK).
“Unconventional technologies—which include hydraulic fracturing, lateral or deep sea drilling, high pressure gas injection, and advanced 3D imaging—may have potential to transform the global energy landscape by dramatically increasing supply and altering import needs,” states Van Eck. “New extraction techniques applied to traditional resources have led to significant, “game changing” increases in North America’s natural gas supply capacity.”
FRAK invests in companies involved in developing and distributing coal bed methane, coal seam gas, shale oil, shale gas, tight natural gas, tight oil and tight sands.
The fund takes a global approach and has 70% of its assets in U.S. based companies, with 28.5% in Canada and 0.3% in Australia.
FRAK charges annual expenses of 0.62%.
Finally, ProShares added the ProShares UltraPro 10 Year TIPS/TSY Spread ETF (NYSEArca: UINF) and ProShares UltraPro Short 10 Year TIPS/TSY Spread ETF (NYSEArca: SINF).
Breakeven inflation (BEI) is a widely followed measure of inflation expectations.
UINF aims for 3x daily performance of theDow Jones Credit Suisse 10-Year Inflation Breakeven Index, while SINF provides inverse or opposite 3x daily performance on the same index.
Both ETFs charge annual expenses of 0.75%. |
