iShares launches liquidity income ETF on BATS Exchange

Dec 20th, 2013 | By | Category: Fixed Income

iShares, the exchange-traded funds business of BlackRock and the world’s largest manager of ETFs, has expanded its short duration product suite with the launch of the iShares Liquidity Income ETF (ICSH) on BATS Exchange.

iShares launches liquidity income ETF on BATS Exchange

Matthew Tucker, Head of iShares Fixed Income Investment Strategy.

Actively managed by BlackRock’s cash management team, the ETF seeks to provide current income consistent with preservation of capital through diversified exposure to short-term bonds and money market instruments.

It invests across a broad spectrum of short-term bonds and money market instruments, targeting an effective duration of less than six months.

The fund comes at a time when large areas of the bond market offer little or no yield, and with a period of rising rates likely ahead of us, investors have been reconsidering the overall duration of their fixed income portfolios. Flows into shorter duration ETFs have reached $34.7 billion globally as investors look to cut interest rate risk in their portfolios.

The fund management team employs a disciplined credit research process focused on fundamental research and analysis of the underlying issuer’s creditworthiness and valuation.

Commenting on the launch, Matthew Tucker, Head of iShares Fixed Income Investment Strategy, said: “As we look towards a period where interest rates are likely to rise, investors will be best served by having access to a variety of short duration tools. Short duration bond ETFs can provide exposure to bonds with minimal interest rate exposure.”

He added: “The launch of iShares Liquidity Income ETF adds to iShares existing suite of products that can help investors manage their interest rate risk and income needs.”

The ETF is not a money market fund and neither does it seek to maintain a stable net asset value of $1.00 per share. It has an expense ratio of 0.18%.

The ETF is the latest to launch on BATS Exchange. The Kansas-based electronic exchange has beaten its main rivals – Nasdaq and NYSE – to win a number of recent ETF primary listings, owing in part to aggressive pricing but also to its so-called ‘Competitive Liquidity Provider (CLP) program’, a rewards-based scheme designed to incent market makers to increase liquidity and create tighter quoted spreads.

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