Today BlackRock’s iShares unit is filling out its range of offerings built around the investment-grade corporate debt space with the rollout of three funds.
Two of the funds, the iShares 5-10 Year Investment Grade Corporate Bond ETF (MLQD) and the iShares 10+ Year Investment Grade Corporate Bond ETF (LLQD), represent subsets of the $37.5 billion iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and complement the $544 million iShares 0-5 Year Investment Grade Corporate Bond ETF (SLQD).
The new funds list on the Bats exchange, which is owned by ETF.com’s parent company, CBOE.
“We are taking a suite approach. The idea here is the recognition on our part that our investors are increasingly demanding more precision and flexibility,” said Stephen Laipply, head of iShares’ fixed-income strategy in the U.S.
“By building out the LQD suite to include intermediate and long in addition to [SLQD] and broad LQD, we basically have completed that suite for our investors. Now they can move across the maturity curve and better manage risk,” he added.
Each of the new funds comes with an expense ratio of 0.06%, in line with SLQD. Interestingly, LQD costs 0.15%, more than twice that of any of the iShares funds that track subsets of its benchmark index. But at 6 basis points, SLQD, MLQD and LLQD are the cheapest funds in their respective categories.
“I think what these products provide is being able to have a more refined view on the LQD investment universe. LQD is the workhorse that gives you the broad corporate exposure. SLQD, MLQD and LLQD allow you to further refine views on that universe and implement them,” Laipply said.
Another Target Maturity ETF
iShares also offers a lineup of target-maturity investment-grade corporate bond ETFs, and today it’s also rolling out the iShares iBonds Dec 2027 Term Corporate ETF (IBDS). IBDS lists on the NYSE Arca and, like the other funds in its family, comes with an expense ratio of 0.10%.
iShares now has a total of 11 such funds covering the years 2017-2027. Laipply points out that the target-maturity corporate funds can be used to fine-tune exposures in conjunction with LQD, SLQD and the two other iShares funds that launched today.
He describes it as a sort of hierarchy, with LQD at the top level, the three short-, intermediate- and long-term maturity funds just below it, and the iBonds products below those. The iBonds funds, Laipply says, offer “even more precision and flexibility.”
Contact Heather Bell at [email protected]