BlackRock Files for Money Market ETFs
BlackRock has filed registration statements for two new Money Market ETFs A Form N-1A Registration Statement for the BlackRock ETF Trust and its new iShares Prime Money Market ETF tells us, "The iShares Prime Money Market ETF seeks as high a level of current income as is consistent with liquidity and stability of principal.... The Fund seeks to achieve its investment objective by investing, under normal circumstances, in a broad range of U.S. dollar-denominated money market instruments, including government, U.S. and foreign bank, and commercial obligations and repurchase agreements. The Fund invests in securities maturing in 397 days or less (with certain exceptions) and the portfolio will have a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less. In addition, the Fund may invest in mortgage- and asset-backed securities, short-term obligations issued by or on behalf of states, territories and possessions of the United States, the District of Columbia, and their respective authorities, agencies, instrumentalities and political subdivisions and derivative securities such as tender option bonds, beneficial interests in municipal trust certificates and partnership trusts. The Fund may also invest in variable and floating rate instruments, and transact in securities on a when-issued, delayed delivery or forward commitment basis. The Fund's Board of Trustees has determined that the Fund will qualify as a 'money market fund' pursuant to Rule 2a-7 under the Investment Company Act of 1940, as amended ('Rule 2a-7')." It also states, "The securities purchased by the Fund are subject to the quality, diversification, and other requirements of Rule 2a-7, and other rules of the Securities and Exchange Commission ('SEC'). Unlike a traditional money market fund, the Fund operates as an exchange traded fund ('ETF'). As an ETF, the Fund's shares will be traded on [exchange to be determined] and will generally fluctuate in accordance with changes in net asset value ('NAV') per share as well as the relative supply of, and demand for, shares on [the exchange]." The filing adds, "You could lose money by investing in the Fund. The Fund is an actively managed ETF that does not seek to replicate the performance of a specified index. As with any investment, you could lose all or part of your investment in the Fund, and the Fund's performance could trail that of other investments. Because the share price and NAV of the Fund will fluctuate, when shares are sold on [the exchange] (or redeemed, in the case of an Authorized Participant), they may be worth more or less than what was originally paid for them. The Fund may impose a fee upon the sale of shares by Authorized Participants. The Fund generally must impose a fee when net sales of Fund shares exceed certain levels. An investment in the Fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor is not required to reimburse the Fund for losses, and you should not expect that the sponsor will provide financial support to the Fund at any time, including during periods of market stress. The Fund is subject to certain risks, including the principal risks noted below, any of which may adversely affect the Fund's NAV, trading price, yield, total return and ability to meet its investment objective. Unlike many ETFs, the Fund is not an index-based ETF. Certain key risks are prioritized below (with others following in alphabetical order), but the relative significance of any risk is difficult to predict and may change over time. You should review each risk factor carefully.... The Fund discloses its portfolio holdings daily at www.blackrock.com." See also the N1-A for iShares Government Money Market ETF and our Sept. 26 Link of the Day, "Texas Capital Launches Govt MM ETF."
