Delivers Innovative Access to Treasury,
High-Yield and Corporate Credit Markets
BlackRock today launched a first-of-its-kind suite of fixed
income ETFs that provide access to buy-write investment strategies
on baskets of fixed income securities: the iShares 20+ Year
Treasury Bond BuyWrite Strategy ETF (Cboe: TLTW), iShares
High Yield Corporate Bond BuyWrite Strategy ETF (Cboe: HYGW)
and the iShares Investment Grade Corporate Bond BuyWrite
Strategy ETF (Cboe: LQDW). Each ETF packages two potential
income sources into one ticker – premiums generated by selling
monthly call options on the underlying ETFs (TLT, HYG and LQD) and
the yields from each of the underlying ETFs themselves.
“The iShares’ bond ETF platform has the world’s largest,
comprehensive toolkit1 for individuals and institutions by
providing access to the $124 trillion fixed income market with
essential building blocks for a wide variety of macroeconomic
climates,” said Carolyn Weinberg, Global Head of Product
for ETF and Index Investments, BlackRock. “Market participants
have used a buy-write strategy on equities since options were first
listed more than 50 years ago. The iShares Bond BuyWrite ETFs
introduce these capabilities to fixed income, pioneering new
possibilities for an asset class sitting at the center of so many
long-term portfolios.”
Helping Investors; Capital Markets Innovation
The iShares BuyWrite ETFs aim to increase yield potential for
investors, debuting during the most challenging environment for
fixed income in decades due to inflation, hawkish central banks and
interest rate volatility.
Each iShares BuyWrite ETF seeks to track a designated index from
Cboe Global Indices by owning shares of the underlying ETF and
selling one-month call options at a strike price at or near the
closing price of the ETF the day before the strategy writes the
call options. Each month, the iShares BuyWrite ETFs will distribute
to shareholders both the call option premiums collected and the
underlying funds’ monthly distributions.
“TLT, HYG and LQD have grown into important financial
instruments in the fixed income markets and have some of the most
liquid options markets of any ETF2,” said Stephen Laipply, U.S.
Head of Bond ETFs at BlackRock. “Our buy-write exposures expand
the functionalities of bond ETFs by unlocking a sophisticated use
case with a potential to enhance income for investors in this
volatile yield environment.”
BlackRock pioneered bond ETFs in 2002 with the launch of four
products and this space has since grown 23% annually into a $1.7
trillion industry with more than 1,400 offerings.3 Over 20 years,
bond ETFs have become fundamental to fixed income investing and
BlackRock estimates they will reach $5 trillion in AUM by the end
of the decade.
ETF
Index
Expenses*
iShares 20+ Year Treasury Bond BuyWrite
Strategy ETF (TLTW)
Cboe TLT 2% OTM BuyWrite Index
0.35%
iShares High Yield Corporate Bond BuyWrite
Strategy ETF (HYGW)
Cboe HYG BuyWrite Index
0.69%
iShares Investment Grade Corporate Bond
BuyWrite Strategy ETF (LQDW)
Cboe LQD BuyWrite Index
0.34%
About BlackRock
BlackRock’s purpose is to help more and more people experience
financial well-being. As a fiduciary to investors and a leading
provider of financial technology, we help millions of people build
savings that serve them throughout their lives by making investing
easier and more affordable. For additional information on
BlackRock, please visit www.blackrock.com/corporate.
About iShares
iShares unlocks opportunity across markets to meet the evolving
needs of investors. With more than twenty years of experience, a
global line-up of 900+ exchange traded funds (ETFs) and $2.78
trillion in assets under management as of June 30, 2022, iShares
continues to drive progress for the financial industry. iShares
funds are powered by the expert portfolio and risk management of
BlackRock.
*Net expense ratio shown. BlackRock Fund Advisors ("BFA"), the
investment adviser to the Funds and an affiliate of BlackRock
Investments, LLC, has contractually agreed to waive a portion of
its management fees through 02/29/2028. Gross expense ratios are
TLTW: 0.50%; LQDW: 0.49%; HYGW: 1.19%.
Carefully consider the Funds' investment objectives, risk
factors, and charges and expenses before investing. This and other
information can be found in the Funds' prospectuses or, if
available, the summary prospectuses which may be obtained by
visiting www.iShares.com or www.blackrock.com. Read the prospectus
carefully before investing.
Investing involves risk, including possible loss of
principal.
Fixed income risks include interest-rate and credit risk.
Typically, when interest rates rise, there is a corresponding
decline in bond values. Credit risk refers to the possibility that
the bond issuer will not be able to make principal and interest
payments. Non-investment-grade debt securities (high-yield/junk
bonds) may be subject to greater market fluctuations, risk of
default or loss of income and principal than higher-rated
securities. An investment in the Fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency and its return and yield will fluctuate with
market conditions.
Investment in a fund of funds is subject to the risks and
expenses of the underlying funds. A BuyWrite Strategy ETF’s use of
options may reduce returns or increase volatility. During periods
of very low or negative interest rates, the Underlying Fund may be
unable to maintain positive returns. Very low or negative interest
rates may magnify interest rate risk. In a falling interest rate
environment, the ETF may underperform the Underlying Fund. By
writing covered call options in return for the receipt of premiums,
the ETF will give up the opportunity to benefit from increases in
the value of the Underlying Fund but will continue to bear the risk
of declines in the value of the Underlying Fund. The premiums
received from the options may not be sufficient to offset any
losses sustained from the volatility of the Underlying Fund over
time. The ETF will be subject to capital gain taxes, ordinary
income tax and other tax considerations due to its writing covered
call options strategy.
Diversification and asset allocation may not protect against
market risk or loss of principal. There is no guarantee that any
fund will pay dividends. Buying and selling shares of ETFs may
result in brokerage commissions. Information on derivatives is for
educational purposes only.
This information should not be relied upon as research,
investment advice, or a recommendation regarding any products,
strategies, or any security in particular. This material is
strictly for illustrative, educational, or informational purposes
and is subject to change.
The iShares and BlackRock Funds are distributed by BlackRock
Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, sold or promoted
by CboeGlobal Indices, LLC and/or its affiliates (together, “CGI”),
nor does this company make any representation regarding the
advisability of investing in the Funds. “Cboe®” is a registered
trademark of CGI. BlackRock is not affiliated with CGI.
©2022 BlackRock, Inc. All rights reserved. iSHARES and
BLACKROCK are trademarks of BlackRock, Inc., or its
subsidiaries in the United States and elsewhere. All other marks
are the property of their respective owners.
_______________________________ 1 BlackRock fixed income ETFs
hold $711 billion in AUM globally, as of August 18, 2022. Source:
BlackRock 2 Source: Bloomberg/ETF.com: July 2022:
https://www.etf.com/sections/features-and-news/etfs-most-liquid-options
3 Bond ETF average annualized growth rate of 23.4% compares with
open-end mutual fund growth rate of 9.5% in the five years ended
Dec. 31, 2021. Simfund for U.S. MFs (as of December 2021),
Broadridge for non-US MFs (as of November 2021), BlackRock GBI
iShares for global ETFs (as of December 2021).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220822005056/en/
Media Contact: Luke Shane Luke.shane@blackrock.com
646-592-1672
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