BlackRock launches ETFs for fixed-income laddering

Good for advisers seeking ways to help clients protect principal

Apr 19, 2013 @ 11:03 am

By Jeff Benjamin

BlackRock Inc. today launched its own version of target-maturity exchange-traded funds, which are designed to provide access to the corporate bond market and help advisers and investors apply fixed-income-laddering strategies.

The first series of iSharesBonds Corporate ex-Financial Term ETFs include maturity dates of 2016 (IBCB), 2018 (IBCC), 2020 (IBCD) and 2023 (IBCE).

Similar to an individual bond, the ETFs will liquidate on the maturity dates. These particular ETFs will liquidate in March of the year of maturity.

“We think this will be appealing to institutional investors that want an ETF that looks like a bond,” BlackRock spokeswoman Melissa Garville said.

In 2010, BlackRock launched the industry's first target-maturity, or term, ETFs with the municipal bond series that currently has $300 million under management in ETFs maturing between 2013 and 2017.

Guggenheim Investments followed suit in 2010 with its BulletShares lineup of target-maturity ETFs for corporate and high-yield bonds.

The BulletShares lineup has grown to about $2 billion.

A key feature of the target-maturity ETFs is efficient access to a diversified pool of bonds that have a set maturity date.

“Bank treasurers are challenged to build diversified portfolios in an environment of low liquidity, low yields and interest rate volatility,” Matthew Tucker, head of iShares fixed-income-investment strategy, said in a statement.

While BlackRock is touting its new lineup as being geared toward institutional investors, the ETFs are also ideal for financial advisers looking to build laddered-bond portfolios.

The rollout of these types of target-maturity ETFs adds a fresh endorsement to the traditional bond-ladder strategy as a mean of protecting principal.

In an interview last month, Guggenheim's head of product development, Bill Belden, said education about these products should not be taken lightly.

“The BulletShares ETFs is not a strategy, it's a component of a strategy,” he said.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Why some retirement plan advisers think Fidelity is invading their turf

InvestmentNews editor Frederick P. Gabriel Jr. and reporter Greg Iacurci talk about this week's cover story that looks at whether Fidelity Investments is stepping on the toes of retirement plan advisers.

Latest news & opinion

Broker protocol: Indecision over recruiting agreement is rampant

Ruckus over recruiting agreement has even wirehouse lifers wondering if it's time

Cetera reportedly exploring $1.5 billion sale

The company confirmed it's talking to investment bankers to 'explore how to best optimize [its] capital structure at lower costs.'

SEC Chairman Jay Clayton outlines goals for a new fiduciary standard

Rule should provide clarity on role of adviser, enhanced investor protection and regulatory coordination.

Advisers bemoan LPL's technology platform change

Those in a private LinkedIn chat room were sounding off about fears the independent broker-dealer will require a move to ClientWorks before it is fully ready.

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print