BlackRock expands iBonds target-maturity suite with three new muni bond ETFs

May 1st, 2019 | By | Category: Fixed Income

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BlackRock has launched three new funds within its iBonds target-maturity suite of municipal bond ETFs.

BlackRock expands iBonds target-maturity suite with three new muni bond ETFs

BlackRock now offers ten funds within its suite of target-maturity municipal bond ETFs, covering maturity years between 2019 and 2028.

The iShares iBonds Dec 2026 Term Muni Bond ETF (IBMO US), iShares iBonds Dec 2027 Term Muni Bond ETF (IBMP US), and iShares iBonds Dec 2028 Term Muni Bond ETF (IBMQ US) have all been listed on Cboe BZX Exchange during April.

Unlike the majority of fixed income ETFs, which trade in and out of bonds to maintain a target duration exposure, a target-maturity ETF holds its underlying bonds until maturity at which point the fund liquidates.

By combining funds of varying maturities, investors can build portfolios that meet their specific future cash requirements.

Investors benefit from the enhanced diversification of a portfolio of several bonds, thereby mitigating exposure to idiosyncratic risk associated with single bonds such as the risk of downgrade or default.

The new ETFs are linked to indices within the S&P AMT-Free Municipal Callable Factor Adjusted Series. Each index is composed of around 5,000 investment-grade US municipal bonds maturing between 1 January and 2 December in its target year.

Each of the funds comes with an expense ratio of 0.18%.

Following the new launches, BlackRock now offers ten ETFs within its iBonds muni-bond suite with target years ranging between 2019 and 2028.

This now matches its target-maturity corporate bond suite which also includes ten funds covering the same target years. Each of these ETFs invests in investment-grade, US dollar-denominated corporate bonds and are offered with expense ratios of 0.10%.

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