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Fixed Income ETFs
09/25/2002 12:00 am EST
ETFs—exchange traded funds—are a popular vehicle allowing investors to buy a basket of stocks in a specific industry, sector, or market. A recent addition to this stable of investments is the fixed income ETF, which allows investors to buy baskets of bonds with various maturities. Sheldon Jacobs, a long-standing leader in the mutual fund advisory business and editor of The No-Load Fund Investor, explains these new products.
“Equity exchange traded funds (ETFs) have been gaining popularity. Now, Barclays Global Investors, the largest manager of indexed investment products in the world (with $790 billion in assets), has partnered with Lehman Brothers and Goldman Sachs to launch the first four bond exchange traded funds. All these ETFs trade on the American Stock Exchange. All have a low 0.15% expense ratio. They attracted $3 billion from investors in their first two weeks.”
“iShares Lehman 1-3 Year Treasury Bond Fund (
“iShares Lehman 7-10 Year Treasury Bond Fund (
“iShares Lehman 20+ Year Treasury Bond Fund (
“iShares GS $ InvesTop Corporate Bond Fund (
“Like equity ETFs, these bond ETFs are tax-efficient. They provide low-cost diversification and are highly liquid. They can be used as a hedging vehicle, are marginable, shortable, and can be bought and sold intraday. Their only negative is that you need to pay a brokerage commission to buy them. Thus, they are not recommended for small sums.”
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