BlackRock is launching an actively-managed iShares ETF for short-duration bonds as fixed-income investors look for ways to protect themselves from rising interest rates.
The iShares Short Maturity Bond ETF (NYSEArca: NEAR) seeks to maximize current income through diversified exposure to short-term bonds, according to BlackRock.
NEAR will charge an expense ratio of 0.25%. The fund will invest in U.S. dollar-denominated investment-grade fixed-income securities, according to the prospectus. Specifically, ETF will invest primarily in fixed- and floating-rate securities of varying maturities, such as corporate and government bonds, agency securities, instruments of non-U.S. issuers, privately-issued securities, asset-backed and mortgage-backed securities, structured securities, municipal bonds, money market instruments and investment companies.
The management team will typically attempt to keep NEAR’s duration under one year.
“I think we will continue to see investors repositioning toward short duration in anticipating of rising rates,” iShares’ head of fixed-income strategy, Matt Tucker, told Reuters. “This is a way for us to extend that lineup and basically offer an ETF that gives exposure to the short-duration part of the market.”
NEAR looks like it will compete with PIMCO Enhanced Short Maturity ETF (NYSEArca: MINT), which is actively managed and a popular alternative to money market funds. MINT has an expense ratio of 0.35%. [ETFs for Rising Rates]
MINT is the largest actively managed ETF with total assets of more than $4.2 billion. The PIMCO ETF has gathered nearly $2.1 billion year to date, according to IndexUniverse flow data.
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