Daily ETF Watch: Silver Benchmark Switch

Six funds tracking the silver market get a new index.

Effective Friday, Aug. 15, six U.S.-listed ETFs tied to the price of silver will adopt a new benchmark, according to an NYSE communique.

Until today, the London silver fix, a daily spot price set by three firms working in concert, has been a globally used benchmark for silver prices. However, the methodology of benchmarks of this kind came under scrutiny after the Libor scandal two years ago demonstrated that the banks involved in such price setting were not above manipulating the results.

CME Group and Thomson Reuters were chosen to provide a solution, with the CME Group designing a methodology and providing the price platform and Thomson Reuters overseeing the governance and administration, according to an ETF.com Europe article. Notably, neither firm is an investment bank, and the solution meets criteria put forth by the London Bullion Market Association that require it to be “electronic, auction-based and auditable.”

The new “London Silver Price” will underlie the following funds (or provide pricing for at least part of their respective baskets) as of Friday:

• ETFS Physical Precious Metals Basket (GLTR | A-33)
• ETFS Physical Silver Shares (SIVR | A-100)
• ETFS Physical White Metals Basket Shares (WITE | B-46)
• iShares Silver Shares (SLV | A-99)
• ProShares Ultra Silver (AGQ)
• ProShares UltraShort Silver (ZSL)

The fund’s names, tickers and CUSIPS will remain the same.

iShares Adds Target Maturity Muni Bond ETF
 

iShares rolled out another target-maturity municipal bond ETF today, an NYSE communique said.

The iShares iBonds Sep 2020 AMT-Free Muni Bond ETF (IBMI) tracks investment-grade municipal bonds that are scheduled to mature between May 31 and Sept. 2, 2020.

The ETF joins six other similar municipal bond funds in the iShares lineup that target the years 2014 through 2019.

After a 12-basis-point waiver is applied, IBMI has a net annual expense ratio of 0.18 percent, or $18 per $10,000 in assets.

FDIV Launches
Today, First Trust is unveiling an ETF designed to deliver both risk-adjusted income and capital appreciation. The First Trust Strategic Income ETF (FDIV) is a multi-asset, multistrategy fund that relies on four different subadvisors that manage a total of six portfolios, each representing a different asset group.

Those groups include high-yield corporate bonds and senior floating-rate loans; mortgage-related investments; preferred securities; international sovereign bonds; energy infrastructure equities; and high-dividend equity securities.

FDIV carries an expense ratio of 0.87 percent, or $87 per $10,000 in assets.