iShares Plans Target Maturity Bond ETFs

A recent filing from BlackRock’s iShares arm outlines plans for the launch of three new target-maturity municipal bond ETFs that will expand the range of its iBonds muni ETF family by a few years. The proposed ETFs are as follows:

• iShares iBonds Dec 2026 Term Muni Bond ETF
• iShares iBonds Dec 2027 Term Muni Bond ETF
• iShares iBonds Dec 2028 Term Muni Bond ETF

The issuer currently offers seven municipal bond iBonds ETFs covering securities maturing in September 2019 up through securities maturing in December 2025. iShares appears to be shifting the maturity month away from September, with the funds maturing in 2021, and later years all scheduled to terminate in December.

The three funds will generally invest in callable and noncallable investment-grade municipal bonds maturing by Dec. 2 of their respective target years. Eligible components also are not subject to the alternative minimum tax.

The index weights its holdings by market capitalization, with monthly rebalancings beginning five years prior to the maturity date to remove any matured bonds, according to their prospectuses.

The ETF maturing in 2016 tracked an index of more than 12,000 securities as of the end of November, while the 2017 ETF’s index covered more than 9,500 securities, and the 2018 ETF’s index includes 5,658 securities.

The filing did not include tickers or expense ratios, but the iShares iBonds Muni ETFs have a standard ticker convention that they use, and all have expense ratios of 0.18%.

Contact Heather Bell at [email protected]