iShares, the exchange-traded funds (ETFs) business of BlackRock, has expanded its suite of defined maturity corporate bond funds with the launch of four new ‘iSharesBonds’ on the NYSE Arca.
The new ETFs offer investors access to a diversified pool of investment-grade corporate credit securities with a defined maturity date, daily liquidity and price transparency.
If held until maturity, investors can expect to experience a yield that is similar to the yield to maturity of the underlying bonds held in the ETF.
Defined maturity corporate bond ETFs can be utilised to target and manage interest-rate risk, just like with a portfolio of individual bonds, and to match asset maturities with pending liabilities.
Investors can also use the products to construct a bond ladder to help achieve a well-diversified portfolio for investments of almost any size.
iShares previously launched four iSharesBonds Corporate ex-Financials Term ETFs in April 2013. In the two months since launch the funds’ assets under management have increased around 30%, reflecting growing investor demand for defined maturity bond products.
Matthew Tucker, Head of iShares Fixed Income Investment Strategy, commented: “iSharesBonds give investors an entirely new way to access the bond market, one that combines the benefits of both individual bonds and traditional ETFs.”
He added: “We expect the funds to be used by any investor who would use individual bonds, for building diversified portfolios, managing interest rate risk, and constructing bond ladders.”
The four new funds are as follows:
iSharesBond 2016 Corporate Term ETF (IBDA)
iSharesBond 2018 Corporate Term ETF (IBDB)
iSharesBond 2020 Corporate Term ETF (IBDC)
iSharesBond 2023 Corporate Term ETF (IBDD)
They each have an expense ratio of 0.10%.