iShares to switch four Treasury bond ETFs to ICE indices

Feb 1st, 2016 | By | Category: Fixed Income

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iShares, the exchange-traded funds business of BlackRock, has announced that the underlying reference benchmarks of four NYSE-listed Treasury bond ETFs will switch from indices provided by Barclays to newly launched indices from Interactive Data, a subsidiary of exchange operator Intercontinental Exchange (ICE).

iShares switches four Treasury bond ETFs to Interactive Data ICE indices

Indices from Intercontinental Exchange’s newly launched ICE US Treasury Bond Index Series are to be adopted by four iShares Treasury bond ETFs. (file image)

The new ICE indices are part of the ICE US Treasury Bond Index Series, which was unveiled in January.  The switch will be effective on or after March 31, 2016.

The ICE Treasury Bond Index series was developed as a broad representation of the US Treasury market and includes a number of maturity sub-indices ranging from one month to thirty years.

The indices that will underlie the iShares ETFs are the ICE US Treasury 1-3 Year Bond Index, the ICE US Treasury 3-7 Year Bond Index, the ICE US Treasury 7-10 Year Bond Index and the ICE US Treasury 20+ Years Bond Index, with the corresponding ETFs being the iShares 1-3 Year Treasury Bond ETF (SHY), the iShares 3-7 Year Treasury Bond ETF (IEI), the iShares 7-10 Year Treasury Bond ETF (IEF) and the iShares 20+ Year Treasury Bond ETF (TLT) respectively.

All ICE indices are market value weighted and designed to measure the performance of the US dollar-denominated, fixed and floating rate US Treasury market. The ICE US Treasury Bond Index Series has an inception date of December 31, 2015. Index history is available back to December 31, 2004.

Commenting on the transition, Ira Shapiro, Managing Director at BlackRock, commented: “Choosing Interactive Data as the new benchmark provider for four of our Treasury ETFs occurred after a thorough due diligence, testing and selection process. Their proven ability to provide high quality, independent, fixed income pricing, together with their expertise in index design and calculation services, were important factors in our decision.”

Andrew Hausman, president of Pricing and Reference Data at Interactive Data, added: “We are pleased to showcase the breadth and quality of our pricing and reference data through the creation of the ICE US Treasury Bond Index Series. Customers are increasingly relying on Interactive Data’s trusted evaluated pricing to support their risk and collateral management, benchmarking, and trading requirements.”

Demand for fixed income data has grown in line with a rise in the adoption of passive vehicles such as ETFs to gain bond exposure. ETFs covering the fixed income space grew at a 22% organic growth rate during 2015. Institutional investors in particular are increasingly adopting these products due to their diversification and liquidity benefits which address new requirements following the imposition of rules and capital controls after the 2008 financial crisis.

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