Barclays Global Investors Announces New NAIC Position on Investments in iShares Corporate Bond ETF.Business Editors SAN FRANCISCO--(BUSINESS WIRE)--Aug. 7, 2003 Insurance Companies Can Treat iShares GS $ InvesTop Corporate Bond Fund (ticker: LQD LQD Low-Q Diffractometer ) as a Corporate Bond Investment with an NAIC NAIC See National Association of Investors Corporation (NAIC). 1 Rating Barclays Global Investors Barclays Global Investors is a subsidiary of British-based Barclays Bank which is in the investment management industry. It is the largest corporate money manager in the world, with over £936 billion (US$1.77 trillion) under management as of March 2006[1]. (BGI BGI Barclays Global Investors BGI Bainbridge Graduate Institute BGI Bureau Gravimétrique International BGI Borland Graphic Interface (File Name Extension) BGI Bridgetown, Barbados - Grantley Adams International ) announced today that the National Association of Insurance Commissioners' (NAIC) Invested Asset Working Group has adopted a policy that permits an investment in the iShares GS $ InvesTop(TM) Corporate Bond Fund (ticker: LQD) to receive the same risk-based capital treatment as an investment in individual corporate bonds with similar NAIC ratings. Insurance companies are significant investors in U.S. corporate bonds. The LQD, representing a transparent basket of 100 investment grade U.S. dollar-denominated corporate bonds, presents a unique solution to the challenges that may arise when investing in individual bonds, such as availability, liquidity and pricing transparency. The LQD exchange-traded fund Exchange-traded funds (or ETFs) are Open Ended investment companies that can be traded at any time throughout the course of the day. Typically, ETFs try to replicate a stock market index such as the S&P 500 (e.g. is the first and only ETF ETF See Exchange Traded Fund. ETF See exchange-traded fund (ETF). to receive such treatment. The NAIC's position is retroactive to June 23, 2003. The new position permits insurance companies to treat an investment in the LQD as a single Schedule D corporate bond investment, and to assess risk-based capital charges on an investment in the LQD as if it was a single bond with an NAIC 1 rating. As a result, the LQD will be eligible for more favorable risk-based capital treatment than similar pooled investments, such as mutual funds. This treatment should allow insurance companies to take full advantage of the LQD's diversification, liquidity, and pricing benefits, and recognizes the intra-day transparency of the LQD's portfolio holdings and the unique ETF creation and redemption process that permits portfolio securities to be issued and redeemed on an in-kind basis. The LQD, launched on July 26, 2002, is the only corporate bond ETF in the U.S. and as of August 5th, had $2.3 billion in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. . 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 Brokerage Account An arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage, which then carries out the transactions on the investor's behalf. . Similar to many index funds, iShares are designed to have relatively low portfolio turnover, which reduces transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). incurred by the fund and minimizes capital gains distributions to investors. Options are listed on selected iShares. For a list of currently available iShares, visit www.ishares.com. Barclays Global Investors is one of the world's largest asset managers(1) providing structured investment strategies such as indexing, tactical asset allocation Tactical Asset Allocation (TAA) Portfolio strategy that allows active departures from the normal asset mix according to specified objective measures of value. Often called active management. It involves forecasting asset returns, volatilities, and correlations. , and risk-controlled active strategies. In the US, BGI is one of the largest active managers(2), set apart by its risk-controlled approach. BGI managed over $760 billion in assets as of 3/31/03, and over 2,000 funds for more than 2,200 clients in 39 countries around the world. BGI is an innovator in investment management, applying science and technology to the investment process. BGI is owned by Barclays PLC Barclays PLC is a global financial services provider operating in Europe, the United States, the Middle East, Latin America, Australia, Asia and Africa. It is a holding company that is listed in London and New York. It operates through its subsidiary Barclays Bank PLC. . iShares are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA BGFA Barclays Global Fund Advisors BGFA Boston Globe Freelancers Association BGFA Barbados Game Fishing Association BGFA Belize Game Fishing Association BGFA Bulk Glass Forming Ability BGFA Berufsgenossenschaftliches Forschungsinstitut for Arbeitsmedizin ) serves as an advisor to iShares. Barclays Global Investors Services (BGIS BGIS Barclays Global Investors Services BGIS Business and Geographic Information Services (Unit; Illinois Institute for Rural Affairs) BGIS Bhaktivedanta Gurukula & International School (Vrindavan, India) ) assists in the marketing of iShares. BGFA and BGIS are subsidiaries of Barclays Global Investors, N.A., none of which is affiliated with SEI. For complete information, including charges and expenses, request a prospectus by calling 1-800-iSHARES (1-800-474-2737). Read it carefully before you invest. Investing involves risk, including possible loss of principal. iShares transactions will result in brokerage commissions and will generate tax consequences. Mutual funds and iShares are obliged to distribute portfolio gains to shareholders. iShares may be sold throughout the day on the exchange through any brokerage account. However, iShares may only be redeemed directly from the fund by Authorized Participants, in very large creation/redemption units. "GS $ InvesTop(TM) Index" is a are trademark of Goldman, Sachs & Co. and has been licensed for use by Barclays Global Investors, N.A. for use in connection with the Fund. The Fund is not sponsored, endorsed or issued by Goldman, Sachs & Co. or any of its affiliates. Neither Goldman, Sachs & Co. nor any of its affiliates make any representation regarding the advisability of investing in the Fund. Neither SEI nor BGI, nor any of their affiliates, are affiliated with Goldman Sachs & Co. iShares is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. (1)Source: "Special Report: Global Leaders," Pensions & Investments, September 02, 2002, p. 14. (2)Source: "Special Report: Money Manager Directory," Pensions & Investments, May 27, 2002, p.40 |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion