iShares Expands Defined Maturity ETF Suite

BlackRock Inc. BLK's iShares, the world's largest issuer of exchange traded funds, today bolstered its lineup of defined maturity ETFs with the launches of the iShares iBonds Dec 2021 AMT-Free Muni Bond ETF IMBJ and iShares iBonds Dec 2022 AMT-Free Muni Bond ETF IBMK.

Those funds join the iBonds 2014-2020 AMT-Free Muni Bond ETF series, which launched in 2010 and was the ETF industry’s first series of defined maturity funds.

“iBonds are term maturity ETFs that are designed to provide monthly income distributions and a principal repayment at expiration. iBonds can be used in many of the same portfolio applications as individual bonds. The ETF structure provides the added benefits of diversification, professional management, exchange traded flexibility and price transparency,” said iShares in a statement issued earlier Thursday.

The iShares iBonds Dec 2021 AMT-Free Muni Bond ETF follows the S&P AMT- Free Municipal Series Dec 2021 Index and has 76 holdings, according to issuer data. The new ETF charges 0.18 percent per year, or $18 per $10,000 invested.

Both new ETFs “hold a basket of AMT-free, investment grade, non-callable, national municipal bonds that mature in 2021 and 2022, respectively. When the funds reaches their respective planned termination dates, they will distribute substantially all of their net assets, after deduction of any liabilities, to then-current investors,” said iShares.

The iShares iBonds Dec 2022 AMT-Free Muni Bond ETF follows the S&P AMT-Free Municipal Series Dec 2022 Index and is home to 68 holdings. That new ETF also charges 0.18 percent per year.

“For an investment into one of the iBonds AMT-Free Muni Bond ETFs, investors can observe the approximate average yield to maturity of the underlying bond portfolio at the time of purchase. Due to the fact that iBonds are open-ended funds, there will be some volatility around monthly income and the final distribution, but the realized yield should be comparable to that of a portfolio of municipal bonds of similar maturity and credit quality,” according to iShares.

BlackRock has been rapidly expanding its suite of iShares defined maturity ETFs this year. In March, the firm introduced seven defined maturity ETFs. BlackRock introduced five such ETFs last year. The largest ETF in the stable is the iShares iBonds Mar 2018 Corporate ex-Financials ETF IBCC, which has over $172 million in assets under management.