BlackRock’s iShares has filed an initial prospectus for an ETF that would track short-duration junk bonds, an area that has been popular with investors seeking a balance between yield and protection from rising interest rates.
The firm manages the largest junk bond ETF, the $15.1 billion iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG).
On Friday, BlackRock filed iShares 0-5 Year High Yield Corporate Bond ETF. The SEC filing did not include a ticker or fees for the planned fund.
The ETF would compete with PIMCO 0-5 Year High Yield Corporate Bond Index (NYSEArca: HYS) and SPDR Barclays Short-Term High-Yield Bond (NYSEArca: SJNK).
SJNK has $1.7 billion in assets while HYS holds $2.7 billion. The funds have lower yields than junk bond ETFs with longer durations.
“HYS has a lower duration than its competitors in the high-yield bond category, which means that the fund will be less affected by rising interest rates,” Morningstar says in a report on the ETF.
Full disclosure: Tom Lydon’s clients own HYG.
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