iShares Announces Launch of Floating Rate Note Fund
SAN FRANCISCO, CA, June 17, 2011-BlackRock, Inc. (NYSE: BLK) today announced that its iShares® Exchange Traded Funds (ETFs) business, the world's largest manager of ETFs, has launched their first floating rate note fund on the NYSE Arca. The new fund is the iShares Floating Rate Note Fund (NYSEArca: FLOT). By adding FLOT, iShares adds another element to their robust fixed income suite and another tool for investors to use in a rising rate environment.
"The value of floating rate bonds fluctuates much less in response to market interest rate movements than the value of fixed-rate bonds," said Russ Koesterich, iShares Chief Investment Strategist at BlackRock. "They can be a key instrument to help fixed-income investors insulate their portfolio in a rising inflation environment. While we don't see this as a near term threat, we still believe that interest rates are likely to rise, arguably substantially, in 2012 and beyond."
Floating rate notes are bonds that pay a variable rate coupon, rather than a fixed rate coupon like most fixed income investments. Issuers may choose to issue floating rate notes to take advantage of potential lower borrowing costs as compared to fixed rate debt. Floating rate note coupons are comprised of a short-term interest rate and a fixed spread based on the issuing company's credit risk.
"FLOT can serve several roles in an investor's portfolio," said Matt Tucker, iShares Head of Fixed Income Strategy at BlackRock. "It can provide investors with an opportunity to reduce exposure to interest rate risk in the portfolio. In addition, it can serve as a diversifier within traditional fixed income, as well as multi-asset class portfolios. Investors can also use FLOT to gain exposure to credit with less interest rate exposure or as a complement other short duration strategies."
FLOT is benchmarked to the Barclays Capital US Floating Rate Note <5 Years Index. The market cap weighted index measures the performance of U.S. dollar denominated, investment-grade, floating rate notes with less than 5 years to maturity. The bonds that are included in the index must have an original maturity of between 18 months and 5 years and remain in the index until one month prior to maturity.
About BlackRock: BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At March 31, 2011, BlackRock’s AUM was $3.648 trillion. BlackRock offers products that span the risk spectrum to meet clients’ needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of March 31, 2011, the firm has approximately 9,300 employees in 26 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company's website at www.blackrock.com
About iShares: iShares is the global product leader in exchange traded funds with over 460 funds globally across equities, fixed income and commodities, which trade on 19 exchanges worldwide. The iShares Funds are bought and sold like common stocks on securities exchanges. The iShares Funds are attractive to many individual and institutional investors and financial intermediaries because of their relative low cost and trading flexibility. Investors can purchase and sell shares through any brokerage firm, financial advisor, or online broker, and hold the funds in any type of brokerage account. The 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.
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, which may be obtained by calling 1-800-iShares (1-800-474-2737) or by visiting www.iShares.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal. Diversification may not protect against market risk.
Securities with floating or variable interest rates may decline in value if their coupon rates do not keep pace with comparable market interest rates.
Narrowly focused investments typically exhibit higher volatility and are subject to greater geographic or asset class risk. The Fund is subject to credit risk, which refers to the possibility that the debt issuers will not be able to make principal and interest payments. The Fund’s income may decline when interest rates fall because most of the debt instruments held by the Fund will have floating or variable rates.
The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.
This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.
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. Shares of the iShares Funds may be sold throughout the day on the exchange through any brokerage account. However, shares may only be redeemed directly from a Fund by Authorized Participants, in very large creation/redemption units.
The iShares Funds ("Funds") are distributed by SEI Investments Distribution Co. ("SEI"). BlackRock Fund Advisors ("BFA") serves as the investment advisor to the Funds. BlackRock Fund Distribution Company ("BFDC") and BlackRock Execution Services ("BES") assist in the marketing of the Funds. BFA, BFDC and BES are affiliates of BlackRock, Inc., none of which is affiliated with SEI.
The iShares Funds are not sponsored, endorsed or issued by Barclays Capital. This company does not make any representation regarding the advisability of investing in the Funds. Neither SEI, nor BlackRock Institutional Trust Company, N.A., nor any of their affiliates, are affiliated with the company listed above.
©2011 BlackRock Institutional Trust Company, N.A. All rights reserved. iShares® is a registered trademark of BlackRock Institutional Trust Company, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. iS-4860-0611
* Not FDIC Insured * No Bank Guarantee * May Lose Value