Feb 13 BlackRock, the world's largest
manager of exchange-traded funds, will soon release a new series
of fixed-income funds that mature after a set number of years,
like ordinary bonds.
The new ETFs are designed to simplify the task of
institutional money managers like bank treasurers, who currently
must juggle hundreds or even thousands of distinct bond issues
in their portfolios, BlackRock President Robert Kapito said on
A single ETF owns a basket of many bonds but trades far more
easily on a stock exchange.
"I think this will be the biggest product that's ever hit
the fixed income market," Kapito said, speaking at a Credit
Suisse conference in Miami.
The new funds will focus on corporate bonds with maturities
in 2016, 2018, 2020 and 2023, according to BlackRock filings
with the U.S. Securities and Exchange Commission. Each fund will
mature, or pay out all of its bond principal, on March 31 of the
given year. Management fees will be as little as 0.1 percent of
The funds are similar to those of smaller ETF manager
Guggenheim Investments, which offers a series of eight corporate
bond ETFs that mature from 2013 through 2020 and six high-yield
bond ETFs with maturities extending until 2018. Those funds had
total assets of almost $2 billion at the end of last year.
Most fixed-income ETFs own a basket of bonds but continually
buy new ones as current holdings reach maturity. Thus the funds
exist in perpetuity.
BlackRock's iShares line of ETFs oversaw $753 billion at the
end of 2012, more than any other firm.