ETF Watch: iShares Adds To iBonds Lineup

April 13, 2017

Today iShares added yet another ETF to its lineup of target-maturity municipal bond ETFs; this one invests in muni bonds maturing in 2023. The iShares iBonds Dec 2023 Term Muni Bond ETF (IBML) joins six other similar ETFs covering investment-grade municipal bonds that mature in the years 2017 through 2022.

Like the other funds in the family, IBML comes with an expense ratio of 0.18%. The fund is listed on the Bats exchange, which is owned by ETF.com's parent company, CBOE.

iShares also has a family of 10 target-maturity ETFs that invest in investment-grade corporate bonds that mature in the years 2017 through 2026. 

IBML is the 41st iShares ETF to list on Bats and brings the total of listed ETFs on the exchange to 163.

New Impact Fund Launching

A new entrant in the ETF space is making its debut today with the launch of a fund that uses an impact investment strategy. The SerenityShares Impact ETF (ICAN) targets companies that offer goods or services that serve as solutions to societal, social and environmental challenges in particular areas, the prospectus said.

The fund comes with an expense ratio of 0.50% and is listed on the NYSE Arca exchange.

Scott Sacknoff, CEO of SerenityShares, notes that socially responsible investing is becoming more popular.

“It is starting to get a lot more attention. The way ESG [environmental, social, governance] is done is very subjective, even by definition. There is no common definition,” he said.

Fund Methodology
The selection methodology for ICAN’s index covers securities defined by six pillars: environmental stewardship, resource scarcity, societal, living a healthy lifestyle, new initiatives and empowerment. Those six pillars are divided into 20 different themes ranging from environment and climate monitoring to education infrastructure, according to the prospectus.

The index considers all stocks and American depository receipts listed on the Nasdaq and New York Stock Exchange, excluding those that have significant operations in tobacco, alcohol, fossil fuels and weapons. It selects stocks from the remaining universe that have at least $1.5 billion in market capitalization, and that offer solutions and improvements within the targeted themes. Ultimately the index will include 75-100 securities, the prospectus said.

ICAN is different from most ESG ETFs in that, as an “impact” fund, it targets companies based on their business lines rather than taking a broad approach as many funds do in order to achieve as-complete-as-possible coverage of the market.

Defining 'Good'

“We follow more of a top-down approach,” Sacknoff said of the fund’s methodology. “It’s really about how we define the word ‘good.’”

Individual securities are weighted using a modified market-capitalization approach at no more than 3.5% and no less than 0.5% of the index, and individual themes are capped at 20%. The fund is rebalanced quarterly and reconstituted annually.

Sacknoff points out that 94% of assets in impact investments are in the form of private equity or fixed-income securities, such as green bonds.

“From an impact standpoint, there is an incredible need for a public-equity-type product, especially when you start dealing with institutional, that’s liquid, transparent and can handle large inflows,” he said.

Contact Heather Bell at [email protected].

 

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