SAN FRANCISCO–(BUSINESS WIRE)–Barclays Global Investors, N.A. (BGI), the world’s largest Exchange Traded Funds (ETFs) provider1, announced today that Markit Group recently announced changes to the methodology of the iBoxx® $ Liquid High Yield Index. Barclays Global Fund Advisors (BGFA) intends to continue to manage the iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca:HYG) so as to continue to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of the U.S. dollar high yield corporate bond market as defined by the iBoxx® $ Liquid High Yield Index. BGFA also intends to manage the Fund in a manner designed to minimize turnover and maximize cost- and tax-efficiencies.
The index methodology change takes effect at the index’s June 30, 2009 rebalancing, and is expected to be completed over a six-month period. The risk characteristics and sector allocations are generally projected to remain similar.
Other key highlights of the index methodology change include:
Securities must be $400 million par or larger, while the old methodology was $200 million par or larger
There will be an issuer minimum of $1 billion par or larger, while the old methodology had no issuer level minimum
There will be no limit on number of securities in index, whereas the old index had a cap of 50 bonds
The weighting methodology has changed to modified market value weighted from equally weighted by par value
“We believe that the new methodology will provide investors with a more accurate reflection of the high yield market,” said Noel Archard, head of U.S. iShares Product Research and Development. “During and subsequently to the index transition period, we expect the iShares iBoxx $ High Yield Corporate Bond Fund to continue to provide liquidity and tight bid/ask spreads.”
About Barclays Global Investors/iShares
Barclays Global Investors is one of the world’s largest asset managers and a leading global provider of investment management products and services with more than 3,000 institutional clients and US$1.5 trillion of assets under management as of 31 December 2008. BGI transformed the investment industry by creating the first index strategy in 1971 and the first quantitative active strategy in 1979. BGI is the global product leader in exchange traded funds (iShares) with over 360 funds globally across equities, fixed income and commodities which trade on 18 exchanges worldwide. iShares customer base consists of the institutional segment of pension plans and fund managers, as well as the retail segment of financial advisors and high net worth individuals.
Call 1-800-iShares to request a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing.
Investing involves risks, including possible loss of principal. Transactions in shares of the iShares Funds will result in brokerage commissions and will generate tax consequences. iShares Funds are obliged to distribute portfolio gains to shareholders. Bonds and bond funds will decrease in value as interest rates rise. High yield securities may be more volatile, be subject to greater levels of credit or default risk, and may be less liquid and more difficult to sell at an advantageous time or price to value than higher-rated securities of similar maturity.
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by iBoxx®. This company does not make any representation regarding the advisability of investing in the Funds. Neither SEI nor Barclays Global Investors, nor any of their affiliates, are affiliated with the company listed above.
The iShares Funds (“Funds”) are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as the investment advisor to the Funds. Barclays Global Investors Services (BGIS) assists in the marketing of the Funds. BGFA and BGIS are subsidiaries of Barclays Global Investors, N.A., a majority-owned subsidiary of Barclays Bank PLC, none of which is affiliated with SEI.
©2009 Barclays Global Investors, N.A. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.
1 Source: Morgan Stanley Investment Strategies and Bloomberg as of 12/31/2008. Based on number of ETFs, AUM, and market share.
Full Story: Here