Blackrock introduces new iShares Short Maturity Bond ETF
Exchange-traded funds (ETF) provider BlackRock Inc would be launching a new short-maturity bond ETF that would see action on the trading floor Thursday. Blackrock provides ETFs through its iShares business, which was formerly owned by Barclays.
The iShares Short Maturity Bond ETF would be trading under ticker name "NEAR" on the BATS Global Markets. The introduction of the actively-managed ETF would come at the time when concerns on interest rates rising had led investors to invest more in short-term fixed-income securities. When interest rates rise, bond prices would fall. The longer the bond matures, the sharper the bond falls.
In an interview, iShares' head of fixed-income strategy Matt Tucker said, "I think we will continue to see investors repositioning toward short duration in anticipating of rising rates. It's a part of the market where there are actually not a lot of offerings for investors. It represents an interesting sweet spot for some investors who want to take on some risk but maybe not as much as even a two- or three-year duration fund might offer."
The new ETF would include US dollar-denominated short-term fixed-income securities with average duration of one year or less. 80% of the fund would comprise of US debt and corporate debt. Tucker said, "This is a way for us to extend that lineup and basically offer an ETF that gives exposure to the short-duration part of the market."