BlackRock, Inc.’s iShares Exchange Traded Funds business has launched a suite of high yield corporate debt ETFs.
The new iShares ETFs, that began trading today, are the iShares Baa - Ba Rated Corporate Bond Fund (BATS: QLTB) and the iShares B - Ca Rated Corporate Bond Fund (BATS: QLTC).
BlackRock says the two new funds are the first ETFs designed to offer precise exposure to specific credit quality segments of the U.S. corporate debt market. The launch follows the February debut of the iShares Aaa - A Rated Corporate Fund (NYSE Arca: QLTA), which offers exposure to the highest quality US Dollar-denominated corporate bonds rated Aaa - A.
"The creation of the iShares suite of corporate credit quality ETFs is a significant milestone for investors and the industry," said Matthew Tucker, Head of iShares Fixed Income Investment Strategy at BlackRock, in a statement.
"Investors have asked for more targeted iShares fixed income ETFs in order to create custom portfolios and adjust their portfolio exposures quickly as debt market conditions change. The new iShares suite transforms how investors can access specific slices of corporate bonds and brings transparent pricing to an otherwise opaque area of fixed income."
The iShares Baa - Ba Rated Corporate Bond Fund offers access to corporate debt issues that typically offer higher yields than A-rated issuers with less credit risk than broad high yield debt. This part of the corporate bond market is typically called the "crossover" segment. The fund expense ratio is 30 basis points, and is benchmarked to the Barclays Capital U.S. Corporate Baa - Ba Capped Index.
The iShares B - Ca Rated Corporate Bond Fund focuses on access to higher yielding high yield corporate debt issuers rated B - Ca. With the purchase of a single fund, investors can access B to Ca-rated high yield bonds with an iShares ETF that are broadly diversified across sectors and maturities. The fund expense ratio is 55 bps, and is benchmarked to the Barclays Capital U.S. Corporate B - Ca Capped Index.
"The new suite of three iShares corporate bond ETFs supports a highly flexible and uniquely modular portfolio management approach to the corporate credit spectrum. Now investors have the ability to tactically tilt fixed income strategies as needed to overweight or underweight portions of the corporate credit spectrum based on quality and yield," Tucker said.
"Fixed income market conditions can change quickly, so flexibility in managing a portfolio is critical for investors - and a core principle driving the continuous product innovation effort taking place at iShares," he said.