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iShares asks SEC to allow long-short indexes, depositary receipts
By Toni Weeks
San Diego, Oct. 3 - iShares Trust and iShares, Inc. are requesting that the Securities and Exchange Commission allow them to seek investment results corresponding to underlying indexes whose component securities include short positions, according to an Oct. 3 filing with the SEC.
Besides requesting the ability to tap into these long-short indexes, the companies are also requesting the ability to hold American Depositary Receipts and Global Depositary Receipts.
The companies said that currently the underlying indexes of the funds are designated for long-only exposure. They also said that their request is similar to those recently granted by the SEC to other open-end management investment companies.
Long-short indexes employ a strategy to establish long positions in securities amounting to about 130% of net assets and short positions in securities amounting to about 30% of assets. Any new funds that iShares would create subsequent to the SEC's permission to allow long-short indexes would operate as an indexed exchange-traded fund.
The initial new fund is expected to use the MSCI USA Barra Earnings Yield index as its underlying index. This index is a variation of the broader MSCI USA index but is weighted with positive and negative earnings momentum such that it qualifies as a long-short index.
BlackRock Fund Advisors, a subsidiary of BlackRock, Inc., currently serves as the investment adviser to each fund and will also be the investment adviser to any new funds created if the SEC grants the companies' request.
SEI Investments Distribution Co. serves as the principal underwriter and distributor for the shares of each fund.
iShares exchange-traded funds are managed by New York-based BlackRock.
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