Target-maturity ETF market maturing as BlackRock launches four new funds

BlackRock Inc. on Wednesday added four more target-maturity exchange-traded funds. This brings the firm's total target-maturity line-up to 14 ETFs. Similar to individual bonds, target-maturity ETFs are designed to liquidate on their respective maturity dates. The four ETFs launching today will be similar to the four BlackRock launched in April, but the new offerings include financial sector fixed income exposure. The ETFs include iSharesBond 2016 Corporate Term ETF (IBDA), iSharesBond 2018 Corporate Term ETF (IBDB), iSharesBond 2020 Corporate Term ETF (IBDC), and iSharesBond 2023 Corporate Term ETF (IBDD). In 2010, BlackRock launched the industry's first target-maturity ETFs with a municipal bond series, including six ETFs that are set to mature in intervals through 2017. The first of those municipal bond ETFs matured in 2012, which included a liquidation of the fund and delisting. The set of four corporate ex-financials ETFs, launched in April, are set to mature on the same dates as the ETFs launched today. Matthew Tucker, head of iShares fixed income strategy, said the existing target-maturity ETFs have grown to more than $500 million. “We're seeing these funds used by investors who would normally use individual bonds to build bond ladders or bond portfolios,” he said. “We're also seeing some participation from institutional investors.” The other major player in the target-maturity ETF space is Guggenheim Investments Inc., which launched its BulletShares Corporate Bond ETF series in 2010.