iShares adds two 2019 funds to its line-up of corporate term ETFs

By Toni Weeks

San Luis Obispo, Dec. 6 - iShares Trust plans to launch two more fixed-income target date exchange-traded funds, the iSharesBond 2019 Corporate Term ETF and the iSharesBond 2019 Corporate ex-Financials Term ETF, according to separate N-1A filings with the Securities and Exchange Commission.

The new ETFs will take their position within their respective iShares term ETF family; both the corporate term and corporate ex-financials term line-ups include 2016, 2018, 2020 and 2023 ETFs.

Each fund will seek to track the investment results of an index composed of dollar-denominated, investment-grade corporate bonds maturing after March 31, 2018 and before April 1, 2019, but the ex-Financials fund will not contain any financial issuers in its portfolio.

The corporate term ETF will invest in the securities of one of more underlying funds that themselves seek investment results corresponding to their own underlying indexes and individual securities that satisfy the criteria of the Barclays 2019 Maturity Corporate index. The fund will invest in a combination of individual fixed-income securities and underlying funds, primarily consisting of other iShares funds, but may also invest in other ETFs, U.S. government securities, short-term paper, cash and cash equivalents.

For the ex-financials fund, the underlying index includes dollar-denominated, investment-grade securities publicly issued by both U.S. and non-U.S. corporate issuers, primarily from the industrials and utilities sectors, although the components of the index may change. The fund will invest in non-U.S. issuers to the extent necessary to track the underlying index, and non-U.S. investments will initially consist primarily of corporate bonds issued by companies domiciled in developed countries.

Each fund is a term fund that will terminate on or about March 31, 2019, at which time it will distribute its remaining net assets to shareholders.

According to a previous press release, the iSharesBond corporate term ETF products offer investors access to a diversified pool of investment-grade, corporate credit securities with a defined maturity date, daily liquidity and price transparency.

For investors who are concerned about rising interest rates, the funds' rate sensitivity will decline through the life of the ETFs. If held until maturity, they will offer a yield that is similar to the yield to maturity of the underlying bonds held in the ETF.

James Mauro and Scott Radell will be the portfolio managers.

The ticker symbol and management fees for the 2019 funds have not yet been determined.

San Francisco-based BlackRock Fund Advisors, a wholly owned indirect subsidiary of BlackRock, Inc., will serve as the investment adviser to the funds.

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