August 29, 2003

A New PGI for TIPS in the Works

Saw this earlier today...good news if you're looking for an easy way to buy inflation indexed bonds...or better yet, sell the heck out of them with put options. Actually, no word yet on whether options will trade on the new TIPS ETF. I'll keep you posted. 08/20/03 SEC Takes Steps to Make the First TIPS and Broad U.S. Bond Market Exchange Traded Funds Available to Investors SAN FRANCISCO, August 20, 2003 — The U.S. Securities and Exchange Commission took action to authorize the creation of new fixed income iShares exchange traded funds (ETFs). The iShares Lehman U.S. Treasury Inflation Protected Securities and U.S. Aggregate Bond Funds are scheduled to launch on the American Stock Exchange in the 4th quarter of this year, pending issuance of all regulatory relief by the SEC. Each fund will have an expense ratio of 0.20%, beating the average expense ratio of 0.42% of bond index mutual funds.¹ The iShares Lehman U.S. Treasury Inflation Protected Securities Fund will be designed to track the Lehman Brothers U.S. Treasury Inflation Notes Index that measures the performance of the inflation protected public obligations of the U.S. Treasury, also known as "TIPS." The iShares Lehman U.S. Aggregate Bond Fund will be designed to track the dominant broad U.S. investment grade bond index that includes multiple asset classes and maturity ranges. "Our clients have been asking for more fixed income iShares since iShares launched the first four fixed income ETFs in July 2002, so we're pleased that the SEC has taken action," said Lee Kranefuss, CEO of BGI's Intermediary Business. "Many institutional and individual investors are seeing fixed income iShares as an investment solution to the volatile bond market. The iShares Lehman U.S. Aggregate Fund will provide investors with fixed income exposure across multiple sectors in a single trade, while the iShares Lehman TIPS Fund may be of interest to investors who think inflation will rise." "With fixed income iShares investors also enjoy the added benefits of cost efficiency, transparency of price and holdings, and the ability to purchase a basket of bonds with the ease of buying a stock," Kranefuss added. iShares are index funds that are bought and sold like common stocks on national securities exchanges as well as certain foreign exchanges. iShares are attractive because of their relatively 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. Fixed income iShares are the only fixed income ETFs available to U.S. investors.


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