Despite the booming number of new ETFs over the past several years, the bond category has been relatively quiet, but Barclays Global Investors (BGI) has taken steps to correct that.
In mid-January, San Francisco-based BGI, the only company that currently offers fixed-income ETFs in the United States, introduced eight new bond portfolios on the New York Stock Exchange (NYSE), bringing the total number of fixed-income ETFs to 14.
The new products track Lehman bond indices. As with equity ETFs, exchange-traded bond funds provide intraday pricing and lower expense ratios that traditional bond funds don't offer. And according to Lee Kranefuss, CEO of BGI's intermediary and exchange-traded funds business, there's more:
"The iShares fixed-income funds also provide investors with greater trading flexibility than traditional bond mutual funds to implement their market views," Kranefuss says. "Investors can place limit and stop-loss orders on ETFs that allow investors to better time entry and exit into the market. In addition, iShares ETFs can be shorted on a downtick, making them a valuable risk management tool."
At the end of 2006, BGI managed approximately $250 billion in 120 U.S.-listed ETFs. The bond funds accounted for just over $20 billion of that AUM.
Ron DeLegge is the editor of www.etfguide.com.