iShares Launches New Short-Duration Bond ETF

BlackRock’s (NYSE: BLK) iShares unit, the world’s largest issuer of exchange traded funds, added to its lineup of short-duration bond ETFs today with the debut of the actively managed iShares Liquidity Income ETF (BATS: ICSH).

“As we look towards a period where interest rates are likely to rise, investors will be best served by having access to a variety of short duration tools.  Short duration bond ETFs can provide exposure to bonds with minimal interest rate exposure.

“The launch of iShares Liquidity Income ETF adds to iShares existing suite of products that can help investors manage their interest rate risk and income needs,” said Matthew Tucker, head of iShares fixed income investment strategy, in a statement.

Ten-year Treasury yields have surged 56.4%, crushing long duration bonds and bond ETFs in the process while increasing the allure of short-duration fare.

Short-duration bond ETFs, including Treasury and high-yield funds, have gained assets as the spike in Treasury yields has sent investors scurrying out of longer-duration bonds and the exchange traded funds that hold those issues. Some bond ETFs have been losing muscle as investors see an end to the three-decade long Treasuries bull rally and shift into equities due to depressed interest rates.

“iShares Liquidity Income ETF invests across a broad spectrum of short-term bonds and money market instruments, targeting an effective duration of less than six months. The Fund is managed by BlackRock’s Cash Management Team, which has more than 40 years of experience and over $260 billion in assets under management.

“The team employs a disciplined credit research process focused on fundamental research and analysis of the underlying issuer’s creditworthiness and valuation,” according to the statement.

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