iShares plans convertible bond ETF that targets dollar cash pay bonds

By Toni Weeks

San Luis Obispo, Calif., Jan. 13 – iShares Trust announced in an N-1A filing with the Securities and Exchange Commission its plans to offer a new exchange-traded fund targeting investments in convertible securities.

The iShares Convertible Bond ETF will seek to track the investment results of an index composed of U.S. dollar-denominated convertible securities, specifically cash pay bonds, with outstanding issue sizes greater than $250 million.

The fund normally invests at least 90% of its assets in the securities of the underlying index, which is the Barclays U.S. Convertible Cash Pay Bond > $250MM index. Cash pay convertible bonds allow the bondholder the option to convert their investment into a pre-specified number of shares of the issuer’s common stock, but does not require conversion.

Securities in the index may be investment grade, high yield or non-rated. They must be registered with the SEC or issued under Rule 144A.

James Mauro and Scott Radell will be the portfolio managers.

The stock exchange and ticker symbol have not yet been determined.

Management fees and annual fund operating expenses have not been set.

San Francisco-based BlackRock Fund Advisors will serve as the ETF’s investment adviser.

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