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BlackRock Expands Fund Lineup

IShares pursues a new ETF strategy and branding initiative with a core series of funds for buy-and-hold investors, BBH Core Select nears capacity, and Vanguard rolls out a new TIPS product.

Morningstar Fund Analysts, 10/18/2012

Following last week's announcement that BlackRock would launch a new global long/short equity fund, the firm has filed to launch four additional funds this year.

The first, a multiasset real return fund, will be managed by Philip Green, Michael Fredericks, Lutz-Peter Wilke, and Justin Christofel. The fund will invest in Treasury Inflation-Protected Securities, equities, REITs, commodity-related companies, master limited partnerships, and investment-grade and junk bonds to try to beat inflation. Several firms have launched similar real return funds in recent years, although most have failed to gather significant assets as inflation has been kept at bay.

Continuing its foray into multiasset funds, BlackRock also filed to launch BlackRock Market Advantage. The fund will use a risk-factor approach to allocate among a range of asset classes, including stocks, bonds, derivatives, commodities, REITs, and cash. Ked Hogan, Philip Green, Vincent de Martel, Philip Hodges, and Ugo Montrucchio are listed as the managers.

Last, BlackRock filed to launch two short-term bond funds. BlackRock Short Obligations will be managed by Michael Evan and Richard Mejzak and will invest in U.S.-dollar-denominated investment-grade and short-term fixed- and floating-rate debt securities. BlackRock Ultra-Short Obligations fund will be managed by Thomas Kolimago and Eric Hiatt and will invest in a broad range of money market securities.

iShares Launches 4 New ETFs Targeting Portfolios' Core
IShares, the world's largest exchange-traded fund provider and part of the BlackRock family, is targeting a greater proportion of individual investors' portfolios. The firm is branding a new suite of ETFs to target buy-and-hold investors, adding "Core" to six existing ETFs and launching four new funds under the "Core" suite. Four U.S. equity, three international equity, and three fixed-income ETFs comprise the lineup. The new funds include iShares Core MSCI Total International ETF IXUS, iShares Core MSCI Emerging Markets ETF IEMG, iShares Core MSCI EAFE ETF IEFA, and iShares Core Short Term U.S. Bond ETF ISTB. The new ETFs are expected to begin trading on Oct. 22.

As more investment firms look to provide one-stop solutions to meet investors' needs, the move from iShares appears to be following, but stopping just short of, that trend. Instead of providing a packaged solution, the firm is encouraging investors to mix and match various ETFs to build a low-cost portfolio on their own.

In addition, BlackRock and iShares will combine their U.S. retail sales teams and launch a new advertising campaign emphasizing the popularity of their ETFs among investment professionals.

BBH Core Select Set to Close to New Investors
Brown Brothers Harriman & Co. announced it is ready to close BBH Core Select BBTEX to new investors. The fund has reached $3.2 billion in assets as of October 2012, and the firm vows to shutter BBH Core Select's doors once it tips $3.5 billion. The Silver-rated fund's management team has deftly navigated a nimble 30-stock portfolio, earning an 8.2% annualized return since they took over in October 2005 through September 2012, far surpassing the 4.5% and 3.4% of the S&P 500 Index and average large-blend peer, respectively, and with less volatility. Investors noticed this strong result, sending net inflows to the fund in 34 out of the past 36 months, in direct opposite of the outflows occurring at the majority of equity funds.

Morningstar fund analysts cover more than 1,700 mutual funds and write regular commentary covering fund industry news, fund investing trends, picks, portfolio planning, international investing, and more.

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