Daily ETF Watch: New Muni ETF Live

iShares is once again at the forefront of ETF launch and filing traffic.

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Reviewed by: Hung Tran
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Edited by: Hung Tran

iShares is once again at the forefront of ETF launch and filing traffic.

iShares today will begin trading the iShares 2019 AMT-Free Muni Term ETF (MUAH) on the NYSE Arca at a time when investors are looking for safe havens from volatile markets following the Federal Reserve’s decision to deliberately take its foot off the economic stimulus pedal.

Investors, especially those with short-term goals and a growing appetite for target-date maturity muni bond funds, may find comfort in MUAH because of its relatively safe investment profile and hold them to maturity, while reaping the benefits of owning a diversified portfolio.

The fund will track the S&P 500 AMT-Free Municipal Series 2019 Index, which is composed of investment-grade U.S. municipal bonds maturing after May 31 and before Sept. 1, 2019. The index includes municipal bonds primarily from issuers that are state or local governments or agencies (excluding the Commonwealth of Puerto Rico and U.S. territories such as the U.S. Virgin Islands and Guam) that are exempt from U.S. federal income taxes and the federal alternative minimum tax.

MUAH has an annual expense ratio of 0.30 percent, or $30 for every $10,000 invested.

 

Filings

iShares has also filed two updated prospectuses detailing a pair of interest-rate hedged bond ETFs to compete with the offerings from the likes of ProShares, First Trust, Market Vectors and WisdomTree.

The funds are launching at a time when interest rates look like they could begin a rising trend and bond investments become increasingly unstable territory for investors, fueled by the Federal Reserve’s deliberate step-back from its economic stimulus.

The iShares Interest Rate Hedged Corporate Bond ETF (LQDH) will use as its underlying holdings shares of the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD | A-66), which has $15.9 billion in assets under management. LQDH’s annual expense ratio is 0.30 percent, or $30 for every $10,000 invested.

Similarly, the iShares Interest Rate Hedged High Yield Bond ETF (HYHG) will invest in shares of the $13.2 billion iShares iBoxx High Yield Corporate Bond ETF (HYG | B-75), and has an annual expense ratio of 0.65 percent, or $65 for every $10,000 invested.

ETF.com analyst Howard Lee noted that the trendy iShares is extending the interest rate hedging overlay strategy it currently employs in its equity funds into the fixed-income space.

 

Hung Tran is a former staff writer for etf.com.