New ETF Tracks Commercial Mortgage-Backed Securities | ETF Trends

A new exchange traded fund from BlackRock is the first designed to track commercial mortgage-backed securities. The market is making a comeback after imploding in the global financial crisis.

In February, BlackRock launched iShares Barclays CMBS Bond Fund (NYSEArca: CMBS). [iShares Lists Sector Bond ETFs]

“CMBS are fixed income securities that are backed by loans on things like office buildings, retail properties, and hotels.  The sector currently represents about 2% of the U.S. fixed income market,” explains Matt Tucker, head of iShares Fixed Income Investment Strategy at BlackRock.

“For investors who have a positive view on the commercial real estate market, CMBS are a way to gain exposure with less risk than real estate investment trusts (REITs),” he added at the iShares blog. “CMBS also have a compelling income component – compared to sectors that have a similar duration (a measure of bond risk), investment grade CMBS are currently offering a higher yield.”

At the peak in 2007, more than $230 billion in commercial mortgage-backed securities were originated in the U.S., according to the New York Times.