ETF Trends
ETF Trends

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.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.