iShares charted new territory in the bond space in mid-February with the launch of seven fixed-income ETFs, including multiple “first-to-market” funds.
The iShares Financial Sector Bond Fund (NYSE Arca: MONY), the iShares Industrials Sector Bond Fund (NYSE Arca: ENGN) and the iShares Utilities Sector Bond Fund (NYSE Arca: AMPS) each cost 0.30 percent a year in fees, and are the market’s first funds to parse the corporate debt sectors. Invesco PowerShares and State Street Global Advisors both have similar sector funds in registration that have yet to launch.
The rollout also included the iShares Aaa-A Rated Corporate Bond Fund (NYSE Arca: QLTA), the first-ever ETF to tease out the most highly rated corporate bonds. QLTA includes only bonds with at least one year to maturity and at least $500 million of outstanding face value, with as much as 15 percent of the portfolio being tied to non-U.S. issues. It has an annual expense ratio of 0.15 percent.
The iShares Barclays CMBS Bond Fund (NYSE Arca: CMBS), another first-to-market ETF, taps into investment-grade commercial mortgage-backed securities, which are in essence securities that represent interests in “pools” of commercial mortgages. It costs 0.25 percent.
At the same time, iShares debuted the also-unique iShares Barclays GNMA Bond Fund (Nasdaq GM: GNMA). GNMA’s underlying index measures the performance of mortgage-backed pass-through securities issued by the Government National Mortgage Association, also known as Ginnie Mae. It comes with an annual expense ratio of 0.32 percent.
Less exotic is the iShares Barclays U.S. Treasury Bond Fund (NYSE Arca: GOVT), which invests in Treasurys with at least one year to maturity, and that have a minimum of $250 million of outstanding face value. The Treasurys also need to be fixed rate and nonconvertible. GOVT costs 0.15 percent.