ETF Pipeline: International Corporate Bonds, Fixed Income “Spread Funds”

by on May 21, 2010 | ETFs Mentioned:

The pace of new ETF launches may have slowed a bit in May, but the pipeline continues to fill with plenty of interesting products. The latest filings include a fund that could compete with the recently-launched international corporate bond ETF, as well as another inflation-protected bond ETF. 

PowerShares, the Chicagoland ETF issuer that counts small cap sector funds and the first Build America Bond ETF among the newest additions to its product line, filed to offer an international corporate bond ETF. The International Corporate Bond Portfolio (PICB) would be linked to the S&P International Corporate Bond Index, a benchmark that targets investment grade corporate bonds issued by non-U.S. issuers in a handful of currencies (including euros, yen, and pounds).

Earlier this week, State Street rolled out its Barclays Capital International Corporate Bond ETF (IBND), the first exchange traded product to offer exposure to the global corporate bond market (other ETFs in the Corporate Bonds ETFdb Category focus exclusively on U.S. issues).

Exchange Traded Spreads Plans Entry

Separately, San Francisco-based Exchange-Traded Spreads filed for exemptive relief and disclosed some details on a proposed TIPS ETF. The fund outlined in the SEC filing would track the Markit iBoxx TIPS Inflation-Linked 5-10 Index, a benchmark reflecting the performance of the sovereign inflation-linked bond market in the United States with a minimum outstanding par amount of $2 billion. As concerns about inflation in the wake of unprecedented liquidity injections into the global financial system have increased, TIPS ETFs have seen an incredible amount of interest; the iShares Barclays TIPS Bond Fund (TIP) now has more than $20 billion in assets. The space looks like it will become more competitive in coming months; Schwab recently filed for approval on an ETF based on the same index to which TIP is linked.

ETSpreads had previously filed for approval on a line of ETFs that would enter into credit default swaps. As proposed, these products would increase or decrease in value based on the movements of a specified “credit market.”

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Disclosure: No positions at time of writing.