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iShares Plans More Global Junk ETFs
By Cinthia Murphy | February 15, 2012 1:12 pm

iShares, the world’s largest sponsor of ETFs, is taking steps to expand its quickly growing roster of bond funds with the addition of two global fixed-income ETFs that will serve up exposure to high-yielding corporate debt, the second time it has addressed investor demand for income-generating ETFs in as many weeks.

The company recently put two corporate bonds ETFs into registration that would focus on corporate credits around the world that will cover a spectrum of credit quality ranging from low-investment-grade to junk bonds. One of them straddles the two grades, which could keep it from losing credits that get downgraded to junk.

Now, the company has drafted the iShares Global High Yield Corporate Bond Fund and the iShares Global ex-USD High Yield Corporate Bond Fund, both of which would own corporate bonds issued in U.S. dollars, euros, British pounds and Canadian dollars, with the latter fund excluding U.S.-dollar bonds, according to paperwork iShares filed with the Securities and Exchange Commission.

The filing underscores a clear trend in investing recently, namely a desire to find attractive yields at a time when sovereign debt markets in the developed world are plagued with the lowest yields seen in decades. The exquisitely calibrated parsing of high-yield corporate bonds evident in iShares’ plans is a clear sign of that trend.

Just days ago, New York-based Van Eck put in registration its own slew of corporate bond ETFs that strive to deliver outsized yields by canvassing U.S.-issued and global bonds alike.

Both iShares funds will track rules-based Markit iBoxx benchmarks through representative sampling strategies. They might also allocate as much as 20 percent of their portfolios to derivatives such as futures contracts, options and cash equivalents, the company said in the filings.

iShares didn’t disclose tickers and fees weren’t disclosed in the filing.

 

 

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