BlackRock today introduced what it calls the industry’s first buy-write bond ETFs, a suite of products aimed at increasing return potential in a challenging bond environment.
The three iShares BuyWrite ETFs — iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (Cboe: TLTW), iShares High Yield Corporate Bond BuyWrite Strategy ETF (Cboe: HYGW) and iShares Investment Grade Corporate Bond BuyWrite Strategy ETF (Cboe: LQDW) — give access to buy-sell strategies on baskets of fixed income securities, BlackRock said.
The net expense ratios for the funds are 0.35% for TLTW, 0.69% for HYGW and 0.34% for LQDW.
Typically, investors using a call-and-sell strategy buy an underlying security while selling a call option on it, earning income from the sale of the option.
Each new BlackRock ETF combines two potential revenue streams into a single ticker – the premiums generated by writing monthly call options on the underlying ETFs (TLT, HYG and LQDand the returns of each of the underlying ETFs themselves, according to the company.
“iShares’ bond ETF platform has the world’s largest comprehensive toolkit for individuals and institutions by providing access to the $124 trillion fixed income market with the basics essential for a wide variety of macro climates,” said Carolyn Weinberg, global product manager for ETF and index investments at BlackRock.