iShares and Barclays are rolling out new takes on fixed income and MLP ETFs today.
iShares is launching today a bond fund of funds that includes government and corporate debt, while Barclays is bringing to market a new MLP strategy in an ETN wrapper—two strategies that should cater to income-hungry investors.
The latest exchange-traded product rollouts raise to 60 the number of ETPs brought to market so far this year. More than 1,575 ETPs now populate the universe of U.S.-listed ETFs, and total assets are now at a record of $1.756 trillion, according to data compiled by ETF.com Analytics.
The iShares Yield Optimized Bond ETF (BYLD), going live on the NYSE Arca platform, comes at a time when investors are looking for yields in all corners of the fixed-income market and even outside of it.
Rates are low as it is, and the Federal Reserve’s most recent policy meeting has left investors with a sense that rates are likely to be trending higher in the coming months, making capital losses quite probable as bond prices fall.
BYLD’s index, the Morningstar U.S. Bond Market Yield-Optimized Index, will have exposure to government-related fixed-income securities, securitized fixed-income securities, investment-grade credit securities and noninvestment-grade credit securities, according to the filing.
Some iShares ETFs represented in the index include the iShares 1-3 Year Treasury Bond ETF (SHY | A-97), the iShares 10+ Year Credit Bond ETF (CLY | C-78) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG | B-75).
The fund comes with a price tag of 0.28 percent, or $28 for every $10,000 invested.
Also, Barclays Bank PLC and OFI Global Asset Management, which consists of Oppenheimer Funds, is launching the Barclays OFI SteelPath MLP ETN (OSMS), according to a NYSE communique. The ETN will be linked to the volume-weighted average price of the Barclays OFI SteelPath Midstream MLP Index, which tracks the performance of a basket of direct interests in master limited partnerships.
The new partnership expands OFI SteelPath’s footprint beyond mutual funds and separately managed accounts offered through the OFI Global Asset Management franchise.
Mutual fund stalwarts, including TCW and MFS Investment Management, are currently finding new ways (short of creating and launching their own funds) to bring exchange-traded products—usually active strategies—to market, by teaming up with existing issuers, at a time when ETFs are taking off.
To be sure, a plethora of mutual fund firms and insurance companies have begun laying the regulatory groundwork to offer their own ETFs in the past few years; most recently, the insurer Prudential. But precious few—with the exception of Pimco, Fidelity and most recently, Franklin Templeton—have actually launched ETFs.
PowerShares has put into registration a new bond ETF. The PowerShares Laddered 0-5 Year Investment Grade Corporate Bond Portfolio will track the Nasdaq LadderRite 0-5 Year USD Corporate Bond Index, which includes a continuous laddered portfolio of securities with short- to intermediate-term maturities, according to its regulatory filing.
The strategy is designed to track a diversified basket of bonds using an equally weighted annual maturity ladder in an effort to capture the performance of dollar-denominated, investment-grade bonds issued by U.S. and foreign corporations.
This fund should appeal to investors concerned about interest-rate risks in a rising-rate environment. The Federal Reserve has signaled it’s willing to raise rates sooner rather than later in 2015, even as it continues to taper its monthly bond-buying program, stoking investors’ fears as they grapple with an economy that’s still slowly mending post-2008.
Associated fees and tickers were not included in the filing.