Tags: bond | etf | invest | energy

New High-Yield Bond ETF Will Exclude Energy Companies

New High-Yield Bond ETF Will Exclude Energy Companies

Wednesday, 30 March 2016 07:17 AM EDT

BlackRock Inc. is planning to unveil a new U.S.-listed exchange-traded fund that will invest in all areas of the junk-bond market except the tattered energy sector, the asset manager said in a regulatory filing this week.

The first-of-its kind fund, iShares iBoxx $ High Yield ex-Energy Corporate Bond ETF, will come after a sharp decline in oil prices that has routed higher-yield bonds.

The ETF will track a Markit-brand index containing lower-rated corporate debt except those bonds issued by oil and gas producers, as well as suppliers of equipment and services to that industry.

Plans for the ETF were disclosed late Monday in a BlackRock filing with the U.S. Securities and Exchange Commission. The New York-based asset manager declined to comment.

As oil prices slid from 2014 to earlier this year, investors punished bonds of those companies, pricing in fears of greater defaults by overextended drillers, explorers, pipeline companies and related firms.

U.S. crude prices slid about 76 percent from June 20, 2014 to $26.05 a barrel by Feb. 11, 2016, nearly a 13-year low. Over the same period, the BofA Merrill Lynch U.S. High Yield Energy Index tumbled about 46 percent.

Over one-year period through Monday, the widely traded, $16.5 billion iShares iBoxx $ High Yield Corporate Bond ETF sank by 5.3 percent, according to Lipper. Energy makes up more than a tenth of that ETF's portfolio, according to BlackRock, the issuer.

Yet oil has rebounded and, with it, prices of bonds in the energy sector. U.S. crude was trading above $38 a barrel on Tuesday and the high-yield energy index has rebounded 26 percent from its February low. HYG, the broad junk-bond market ETF, is up 2.8 percent over the four-week period that ended Monday, Lipper data shows.

© 2024 Thomson/Reuters. All rights reserved.


InvestingAnalysis
BlackRock Inc. is planning to unveil a new U.S.-listed exchange-traded fund that will invest in all areas of the junk-bond market except the tattered energy sector, the asset manager said in a regulatory filing this week.The first-of-its kind fund, iShares iBoxx $ High...
bond, etf, invest, energy
290
2016-17-30
Wednesday, 30 March 2016 07:17 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved