After the high volatility witnessed in the aftermath of the financial downturn and, again, in the summer last year, advisors and investors are looking for more ways to manage risk. Consequently, bond exchange traded funds have garnered a huge following, and now fund providers are expanding their lineups to include increased opportunities for diversification.
We have seen huge inflows into generic or broad bond ETFs, like the iShares Barclays 20+ year Treasury Bond Fund (NYSEArca: TLT), iShares Barclays Aggregate Bond Fund (NYSEArca: AGG) and iShares iBoxx $ Investment Grade Corporate Bond Fund (NYSEArca: LQD).
More recently, fund providers have begun issuing specialized or niche bond ETF products, writes Roger Nusbaum for TheStreet. For instance, PowerShares previously filed for a suite of sector bond funds, which have not come to market, but iShares has picked up the ball.
In February, the iShares Financials Sector Bond Fund (NYSEArca: MONY), iShares Industrials Sector Bond Fund (NYSEArca: ENGN) and iShares Utilities Sector Bond Fund (NYSEArca: AMPS) began trading. [iShares Launches Sector Bond ETFs]
MONY includes large positions in Citigroup (NYSE: C), Bank of America (NYSE: BAC) and JP Morgan (NYSE: JPM), along with traditional investment banks like Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS). The fund has an average credit rating of BBB+ and an effective duration of 5.32 years. MONy has a SEC yield of 3.0%.