iShares Adds Global and International TIPs ETFs to Menu

May 26, 2011 by  
Filed under Commentary, ETF IPOs (New ETFs)

BlackRock (BLK) introduced two new inflation-protected bond ETFs on 5/20/11 (press release).  The iShares Global Inflation-Linked Bond Fund (GTIP) and iShares International Inflation-Linked Bond Fund (ITIP) include exposure to government issued inflation-protected bonds from both developed and emerging nations.

iShares Global Inflation-Linked Bond Fund (GTIP) is benchmarked to the BofA Merrill Lynch Global Diversified Inflation-Linked Index.  It is the first ETF to provide access to both U.S. and international inflation-linked bonds.  Top country exposure is currently U.S. 32.4%, U.K. 19.4%, France 11.2%, Brazil 10.2%, and Italy 6.6%.

The fund has 42 holdings, real yield to maturity of 1.4%, real yield duration of 9.3 years, and an expense ratio of 0.40%.  Additional information is located in the prospectus (pdf) and on the overview page.

iShares International Inflation-Linked Bond Fund (ITIP) is benchmarked to the BofA Merrill Lynch Global ex-US Diversified Inflation-Linked Index.  However, the current country weightings suggest that something else is going on in addition to just removing U.S. exposure from GTIP.  Some country allocations actually decline from their levels in GTIP with U.K. at 14.2%, France 13.4%, Brazil 12.0%, Italy 7.9%, and Japan 4.7%.

The fund has 38 holdings, real yield to maturity of 2.3%, real yield duration of 8.5 years, and an expense ratio of 0.40%.  Additional information is located in the prospectus (pdf) and on the overview page.

ITIP will compete directly with the SPDR DB International Government Inflation-Protected Bond ETF (WIP), introduced more than three years ago.  According to WIP’s overview, its portfolio has 74 holdings, real yield to maturity of 1.8%, real yield duration of 9.4 years, and an expense ratio of 0.50%.

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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