SOURCE: BlackRock, Inc.

BlackRock, Inc.

December 03, 2010 09:41 ET

iShares Launches Short-Term TIPS Exchange Traded Fund

Builds on iShares' Strong Fixed Income Offerings, Which Have Received the Most Net Flows of Any ETF Family Year-to-Date

SAN FRANCISCO, CA--(Marketwire - December 3, 2010) - BlackRock, Inc. (NYSE: BLK) today announced that its iShares® Exchange Traded Funds (ETFs) business, the world's largest manager of ETFs, is launching the iShares Barclays 0-5 Year TIPS Bond Fund (NYSE Arca: STIP) on the NYSE Arca. The fund offers targeted exposure to the short end of the domestic Treasury Inflation Protected Security (TIPS) curve through TIPS with less than five years to maturity. The new fund is the only ETF that offers access to the very shortest end of the curve (zero to one year), and is intended to help investors seek protection against realized inflation, achieve additional portfolio diversification, or express a view on yields.

The new iShares Barclays 0-5 Year TIPS Bond Fund expands the iShares fixed income offering to 33 ETFs, which have seen a high level of interest in 2010 as investors seek income, a hedge against inflation and more precise fixed income exposure in the U.S. and internationally. According to FactSet, Bloomberg and BlackRock, iShares has the most fixed income ETFs and has received double the net flows into its fixed income offerings versus other ETF providers in 2010. iShares fixed income ETFs have brought in $14 billion this year, as of November 30th, and currently have a total of $93 billion under management.

"iShares has long been the fixed income ETF leader, and we have continued to see strong interest in our fixed income products this year, as investors look for protection from inflation and further diversification in their portfolios," said Matt Tucker, Head of Fixed Income Investment Strategy for iShares at BlackRock. "The new iShares Barclays 0-5 Year TIPS Bond Fund offers investors these same attributes along with a low sensitivity to interest rates. For example, a STIP investor would receive higher distributions if inflation increases over time, but would see less impact if interest rates rise than would an investor in a longer maturity TIPS fund."

The new iShares Barclays 0-5 Year TIPS Bond Fund invests only in TIPS securities with 0-5 years remaining to maturity. Unlike other TIPS ETFs, STIP holds securities until maturity. This means that securities acquired by STIP pay out inflation-adjusted income through the fund's distributions and then return principle to the fund at maturity. These maturity proceeds are then used to purchase more TIPS securities. As a result of this mechanism, a greater percentage of an investor's return in STIP is made up of inflation adjusted income relative to other TIPS funds.

TIPS as an asset class have two primary benefits to investors:

  • Potential for inflation protection- a holder of TIPS receives compensation for increases in inflation. For STIP this compensation comes in the form of the monthly income distributions. As inflation rises, a holder of STIP will receive a larger monthly distribution.
  • Diversification -- TIPS have historically had a low correlation with other asset classes and thus provide diversification to a broad portfolio.

About BlackRock
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At September 30, 2010, BlackRock's AUM was $3.446 trillion. BlackRock offers products that span the risk spectrum to meet clients' needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares® (exchange traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of September 30, 2010, the firm has approximately 8,900 employees in 24 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For
additional information, please visit the Company's website at www.blackrock.com.

About iShares
iShares is the global product leader in exchange traded funds with over 460 funds globally across equities, fixed income and commodities, which trade on 19 exchanges worldwide. The iShares Funds are bought and sold like common stocks on securities exchanges. The iShares Funds are attractive to many individual and institutional investors and financial intermediaries because of their relative low cost, tax efficiency and trading flexibility. Investors can purchase and sell shares through any brokerage firm, financial advisor, or online broker, and hold the funds in any type of brokerage account. The iShares customer base consists of the institutional segment of pension plans and fund managers, as well as the retail segment of financial advisors and high net worth individuals.

Carefully consider the funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the funds' prospectuses, which may be obtained by calling 1-800-iShares (1-800-474-2737) or by visiting www.iShares.com. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. Diversification may not protect against market risk. There is no guarantee that distributions will be paid.

Bonds and bond funds will decrease in value as interest rates rise. TIPS can provide investors a hedge against inflation, as the inflation adjustment feature helps preserve the purchasing power of the investment. Because of this inflation adjustment feature, inflation protected bonds typically have lower yields than conventional fixed rate bonds and will likely decline in price during periods of deflation, which could result in losses. Government backing applies only to government issued securities, not iShares exchange traded funds. An investment in the Fund(s) is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Transactions in shares of the iShares Funds will result in brokerage commissions and will generate tax consequences. iShares Funds are obliged to distribute portfolio gains to shareholders. Shares of the iShares Funds may be sold throughout the day on the exchange through any brokerage account. However, shares may only be redeemed directly from a Fund by Authorized Participants, in very large creation/redemption units.

The iShares Funds ("Funds") are distributed by SEI Investments Distribution Co. ("SEI"). BlackRock Fund Advisors ("BFA") serves as the investment advisor to the Funds. BlackRock Execution Services ("BES") and BlackRock Fund Distribution Company ("BFDC") assists in the marketing of the Funds. BFA, BES and BFDC are affiliates of BlackRock, Inc., none of which is affiliated with SEI.

The iShares Funds are not sponsored, endorsed or issued by Barclays Capital. This company does not make any representation regarding the advisability of investing in the Funds. Neither SEI, nor BlackRock Institutional Trust Company, N.A., nor any of their affiliates, are affiliated with the company listed above.

* Not FDIC Insured * No Bank Guarantee * May Lose Value