BlackRock has submitted filings to introduce two new money market funds in ETF form on Thursday. These new offerings, named iShares Prime Money Market and iShares Government Money Market ETFs, will comply with the Securities and Exchange Commission's Rule 2a-7, ensuring high-quality ratings and minimal credit risk.
The move follows Texas Capital Bancshares Inc's (NASDAQ:TCBI) launch of the first 2a-7 ETF in September. Financial Times reported on Thursday that both BlackRock funds will focus on securities with maturities of 397 days or less, maintaining a dollar-weighted average maturity of 60 days or fewer and a dollar-weighted average life of 120 days or fewer.
Details on the proposed ETFs' fees were not disclosed in the filings. Texas Capital's ETF charges a fee of 0.20%, while BlackRock's similar existing ETFs have lower fees, such as the iShares US Treasury Bond ETF (BATS:GOVT) at 0.05% and the 0-3 Month Treasury Bond ETF at 0.09%.
In September, BlackRock liquidated two open-end money market funds in response to upcoming SEC rule changes requiring liquidity fees for prime institutional funds.
The introduction of these ETFs by BlackRock comes amid a significant shift in the money-market industry. Recently, the $6.3 trillion money-market sector saw the launch of its first ETF, the Texas Capital Government Money Market ETF (NYSE:MMKT), which capitalizes on the surge in money-market funds driven by high short-term yields. This ETF offers investors a safe haven with competitive returns, providing intraday liquidity and the stability of traditional money-market funds.
Here's how some of the existing money market fund ETFs have performed in the past year:
- NEOS Enhanced Income 1-3 Month T-Bill ETF (NYSE:CSHI): The fund is managed by Neos Funds and holds $465 million worth of net assets. Its yearly return has been 5.72% compared to the category average of 6.51%.
- Invesco Ultra Short Duration ETF (NYSE:GSY): With net assets close to $2.23 billion, the ETF launched by Invesco seeks to provide returns in excess of cash equivalents and provide preservation of capital and daily liquidity. The average duration of maturity is less than a year. The yearly returns of the fund have been 6.76% while the category average is 6.51% and its three-year returns have been 3.62% against the category average of 3.49%.
- PGIM Ultra Short Bond ETF (NYSE:PULS): This ETF is issued by PGIM Investments and has net assets close to $8.56 billion. It normally maintains a weighted average portfolio duration of one year or less and a weighted average maturity of three years or less. The fund's returns in the past year have been 6.53% against the category average of 6.51% while its three-year return has been 4.33% against the category average of 3.49%.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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