BlackRock recasts four US bond ETFs

Aug 7th, 2018 | By | Category: Fixed Income

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BlackRock has restructured four US-listed fixed income ETFs, transitioning the funds to new indices and providing them with new names and tickers to reflect the changes.

BlackRock switches four USD fixed income ETFs to ICE indices

BlackRock has repurposed four fixed income ETFs.

The four funds include a broad market ETF covering the entire maturity spectrum and three ETFs targeting the short, medium, and long duration segments of the yield curve.

The ETFs previously tracked indices from Bloomberg Barclays but are now linked to indices provided by ICE Data Services, the indexing division of Intercontinental Exchange.

The newly adopted indices consist of US dollar-denominated investment grade bonds from corporate issuers only.

This is fundamentally different from the Bloomberg Barclays indices which also included a non-corporate component comprising securities issued by foreign agencies, sovereigns, supranationals and local authorities.

“As investors have expressed a desire for more focused corporate exposure, these index changes will ensure we offer the right ETFs for our clients’ evolving needs,” said Heather Brownlie, Head of US iShares Fixed Income at BlackRock.

Lynn Martin, President and Chief Operating Officer of ICE Data Services, added: “BlackRock iShares is a leader in ETF issuance and we’re excited to have been selected as the index provider for these funds. As the trend towards indexation continues to grow, our innovative and flexible index services offer a wide range of indices and customized solutions to meet the evolving needs of our customers.”

The funds

The ETFs are all sizable, with more than $500 million in assets under management apiece, and representing almost $19 billion collectively.

The $1.5bn iShares US Credit Bond ETF (CRED US), trading on Nasdaq Exchange, has been renamed the iShares Broad USD Investment Grade Corporate Bond ETF (USIG US) and now tracks the ICE BofAML US Corporate Index. Bonds must have a remaining maturity greater than one year to be eligible for the new index which has an effective duration of 7.0 years. It previously tracked the Bloomberg Barclays US Credit Bond Index.

The $10.2bn iShares 1-3 Year Credit Bond ETF (CSJ US), also trading on Nasdaq, has been renamed the iShares Short-Term Corporate Bond ETF (IGSB US). It now tracks the ICE BofAML 1-5 Year US Corporate Index, which has a slightly wider scope compared to its predecessor, admitting bonds with remaining maturities between one and five years compared to one and three years for the Bloomberg Barclays index. The new index has an effective duration of 2.7 years. It previously tracked the Bloomberg Barclays US 1-3 Year Credit Bond Index.

The $6.3bn iShares Intermediate Credit Bond ETF (CIU US) also trades on Nasdaq and has been renamed the iShares Intermediate-Term Corporate Bond ETF (IGIB US). It now tracks the ICE BofAML 5-10 Year US Corporate Index, switching from the Bloomberg Barclays US Intermediate Credit Bond Index. The index has an effective duration of 6.2 years, and, similar to its predecessor, targets bonds with remaining maturities between five and ten years.

The $540m iShares 10+ Year Credit Bond ETF (CLY US) has been renamed the iShares Long-Term Corporate Bond ETF (IGLB US) and is the only one of the four to trade on NYSE Arca. It will now track the ICE BofAML 10+ Year US Corporate Index, targeting bonds with remaining maturities greater than one year. The new index has an effective duration of 13.3 years. It previously tracked the Bloomberg Barclays US Long Credit Bond Index.

Each of the funds has an expense ratio of 0.06%.

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