BlackRock Inc.'s exchange-traded-fund arm, iShares, plans to launch a series of corporate-bond ETFs that look and act like individual bonds.
The proposed series of iShares Corporate Bond Funds will be a set of target date ETFs, each holding a basket of investment-grade bonds set to expire in their given year. The ETF provider already offers a similar suite of products that hold municipal bonds.
Fixed-income ETFs have been in high demand for the past two years as investors look to access bond markets in a more targeted and more liquid way.
Bond ETFs had $39 billion of inflows this year through the end of last month, the most of any asset class, according to Morningstar Inc.
That puts them on pace to beat last year's record inflows of $43 billion, which were more than double those in 2010.
Even with the sudden popularity, bond ETFs, at $216 billion, have a long way to go to catch up with their equity siblings, which hold more than $900 billion.
Target date ETFs give investors who typically buy individual bonds the same set of maturity and expected yields that they are used to, but with the benefit of getting a diversified basket of bonds in a single purchase with a lower minimum investment and cheaper bid/ask spreads.
In 2010, Guggenheim Investments became the first ETF firm to offer target date bond ETFs with the launch of its BulletShares corporate and high-yield bonds. Those ETFs recently hit $1.75 billion in assets.
The BulletShares Corporate Bond ETFs charge 42 basis points. The iShares products are expected to be priced competitively.
Christine Hudacko, an iShares spokeswoman, declined to comment while the ETFs are in registration.
jkephart@investmentnews.com Twitter: @jasonkephart
