Daily ETF Watch: Bond-Fund Rollouts Near

May 28, 2014

iShares is flexing its muscles with a planned rollout of four bond ETFs.

iShares, the world’s biggest ETF company, on May 29 is launching four corporate bond funds aimed at helping investors manage rising interest rates—two actively managed funds that hedge interest-rate risk and another two that add rungs to its growing family of expiring target-date maturity funds.

The proposed funds come at a time when investors are bracing for rising interest rates as the Federal Reserve continues tapering its bond-buying program. Also, the Fed has signaled that short-term interest rates may rise earlier than expected in 2015. Rates remain at historically low levels more than five years after the collapse of Lehman Brothers unleashed the biggest credit crunch since the Great Depression.

The active funds, which will compete with other products already on the market from both ProShares and Market Vectors are as follows:

Meanwhile, the two iShares target-date maturity funds coming to market tomorrow are focused on investment-grade corporate bonds.

The portfolios close down at their respective maturity dates, allowing investors to control interest-rate risk through strategies such as laddering.

The two funds are as follows:

The launch-date announcement came in an electronic communique from NYSE Arca.

 

Launches

Direxion today is launching the Direxion Daily S&P 500 Bull 2X Shares (SPUU), bringing to more than four dozen the number of leveraged and inverse funds from the New York-based fund sponsor that built its reputation on such strategies.

The fund is launching at a time when the S&P 500 Index is reaching record highs on top of its 30 percent surge in 2013. Industry observers are forecasting another record year for the S&P after a slow first quarter tamed by severe cold weather, a slowdown in China and rising tensions in Ukraine.

SPUU was formerly named the Direxion Daily Large Cap Bull 2X Shares (SFVL), which tracked the NYSE U.S. 100 Index, according to a recent regulatory filing. The fund’s new S&P 500 Index will track the 500 largest companies in the U.S.

While the cost of the fund wasn’t immediately available, Direxion typically prices its inverse and leveraged ETFs with net annual expense ratios of 0.95 percent, or $95 for each $10,000 invested.

The launch-date announcement came in an electronic communique from NYSE Arca, the venue where the fund will have its primary listing.

Filing

Global X has filed regulatory paperwork for its first actively managed offering, called the Global X Emerging & Frontier Bond ETF, to tap in to a small corner of the ETF market that investors are finding few options in.

ETF investors are currently scouring all corners of the fixed-income market, including emerging and frontier markets, to find yields thanks to an era of ultra-low bond yields driven by the Federal Reserve’s zero percent interest and quantitative easing monetary policies.

All told, emerging market fixed-income ETFs currently hold some $8.9 billion in total assets, according to data compiled by ETF.com Analytics.

The transparent active fund will bet on a diversified portfolio of fixed-income instruments of varying maturities issued by government, corporate and/or other issuers domiciled in emerging and frontier countries, including Asia, Latin America, Europe, the Middle East and Africa.

 

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