BlackRock Files to Go Short with ETFs

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BlackRock is seeking the go-ahead from regulators to launch exchange traded funds (ETFs) that short stocks and bonds.

Miles Weiss for Bloomberg reports that the application involves the right to engage in short sales when running ETFs that track market indexes. [Other Leveraged ETFs in the Pipe.]

Until now, the New York- based company’s ETFs have been based on indexes that buy stocks rather than selling them short, which gives returns when the underlying asset declines in value. The ability to act upon short sales would give iShares the chance to move into other areas that were once dominated by money managers. [Can These Strategies Recession-Proof a Portfolio?]

One such ETF would utilize a 130/30 strategy, which goes short on 30% of the underperformers and creates long positions on the top performers equaling 130% of the fund’s assets. The initial 130/30 fund from iShares could be based on the MSCI USA Barra Earnings Yield Index.

For more stories about long-short ETFs, visit our Long-Short category.

Tisha Guerrero contributed to this category.