BlackRock unveils BuyWrite fixed income ETFs
Aug. 22, 2022 3:27 PM ET iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (TLTW), HYGW, LQDW, BLK LQD, TLT, HYGBy: Jason Capul, SA News Editor 31 Comments
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BlackRock (NYSE: BLK) unveiled a grouping of fixed income exchange traded funds that offer the investment community admission to buy-write investment strategies on a basket of fixed income securities.
BlackRock’s new ETFs are as follows: The iShares 20+ Year Treasury Bond BuyWrite Strategy ETF ( TLTW), iShares High Yield Corporate Bond BuyWrite Strategy ETF ( HYGW), and the iShares Investment Grade Corporate Bond BuyWrite Strategy ETF ( LQDW).
Each of the three ETFs packages two potential income sources into one ticker from premiums generated by selling monthly call options on the underlying ETFs and the yields from each of the underlying ETFs themselves.
The underlying ETFs used are the iShares 20+ Year Treasury Bond ETF ( TLT), iShares iBoxx $ High Yield Corporate Bond ETF ( HYG), and the iShares iBoxx $ Investment Grade Corporate Bond ETF ( LQD).
A buy-write strategy is when a market participant buys a security, with options available on it and concurrently writes a call option on that security. The idea of the strategy is to generate income from option premiums.
Carolyn Weinberg, Global Head of Product for ETF and Index Investments at BlackRock stated: “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.”
In related news, BlackRock, the world’s largest asset manager, has also expanded its actively managed exchange traded fund lineup with the launch of a new fintech fund. |
