iShares Registers Wide Range Of Bond Funds

November 21, 2011

iShares continues its push to offer increasingly specific pockets of the investment universe in ’40 Act ETF wrappers.

iShares, the world’s largest provider of exchange-traded funds filed regulatory paperwork with the SEC to bring to market seven index ETFs that cover a number of pockets of the fixed-income world, and speaks to iShares’ commitment to cover as much of the investment landscape as it can.

Bond funds are typically supposed to be safer investments than stocks. However, the global financial crisis has introduced a great deal of uncertainty about certain bond fund sectors. The iShares filings range from a utility bond fund, an area deemed to be recession proof, to bonds focused on the financial sector, widely regarded as one of the more volatile sectors in the aftermath of the 2008-2009 market meltdown.

The new bond funds will utilize sampling strategies to achieve their investment objectives, meaning they won’t own all the bonds in their underlying indexes. iShares said in the filing that each of the funds will invest at least 90 percent of their assets in securities of their underlying indexes.

The filings appear to be part of an iShares initiative to bring to market funds that will provide more granular exposure. Last week, it took a similar shotgun approach in its filings to bring to market a number of broad-based equity funds targeting different commodities.

At the same time, the company isn’t departing from its focus on relatively straightforward funds regulated under the Investment Company Act of 1940. Noel Archard, a managing director in charge of ETFs at the world’s biggest ETF firm, emphasized the company’s focus on transparent ’40 Act funds at the recent hearing on ETFs in Washington, D.C. Those hearings, which examined risks associated with ETFs, focused on some of the more esoteric ETFs, including those that serve up double or triple exposure to their underlying indexes.

The names of the proposed iShares bond funds and links to their filings are as follows:

iShares Utilities Sector Bond Fund

iShares Financial Sector Bond Fund

iShares Barclays U.S. Treasury Bond Fund

iShares Industrials Sector Bond Fund

iShares Aaa-A Rated Corporate Bond Fund

iShares Barclays GNMA Bond Fund

iShares Barclays CMBS Bond Fund

The filings for the seven funds didn’t include tickers or expense ratios.



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