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iShares launches series of municipal bond ETFs

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Exchange-traded fund provider iShares has launched a suite of municipal bond ETFs on the NYSE Arca.

Each of the six new funds within the series holds a basket of AMT-free, investment grade, non-callable, national municipal bonds that mature in a targeted year.

When each fund reaches its planned distribution date, it will distribute substantially all of its net assets to then-current investors.

There will continually be new funds offered in the series. The new funds, with expense ratios of 0.30 per cent, complement the four existing iShares municipal bond funds.

The new funds are: iShares 2012 S&P AMT-Free Municipal Series; iShares 2013 S&P AMT-Free Municipal Series; iShares 2014 S&P AMT-Free Municipal Series; iShares 2015 S&P AMT-Free Municipal Series; iShares 2016 S&P AMT-Free Municipal Series; and iShares 2017 S&P AMT-Free Municipal Series.

“The iShares Muni Series ETFs represent an innovation for both fixed income investing and ETFs. Investors can now obtain targeted exposure to the municipal yield curve with iShares ETFs that also offer both liquidity and diversification,” says Matt Tucker, managing director of US fixed income strategy, BlackRock. “The new series provides advisers and investors with an invaluable new set of tools for helping to meet municipal bond needs such as building and maintaining municipal bond ladders.”

For an investment into one of the iShares municipal series funds, the yield profile is expected to be comparable to that of a portfolio of municipal bonds of similar maturity and credit quality. Unlike a direct investment in municipal bonds, the breakdown of cash flows between fund monthly distributions and returns at maturity will be variable rather than fixed at the time of investment.

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