First Bond Exchange Traded Funds Set Debut

November 21, 2000 ( - The world's first bond exchange traded funds (ETFs) will begin trading on Thursday on the Toronto Stock Exchange.

Barclays Global Investors Canada Limited (BGI Canada) will launch the iUnits Government of Canada 5-Year Bond Fund and the iUnits Government of Canada 10-Year Bond Fund.

ETFs are funds that are priced, and can be traded, throughout the day just like stocks and bonds.

The iG5 Fund seeks to replicate the return of a bond issued by the Government of Canada with a five-year term to maturity, while the iG10 Fund has a similar objective for bonds with a 10-year maturity.

Interest income will be distributed to unitholders semi-annually.

The ABCs of ETFs

Because ETFs are traded throughout the day, they have greater liquidity flexibility than mutual funds, resulting in less trading within the fund to handle redemptions, and less capital gains taxes to pay for shareholders.

Similarly, the flexibility is expected to draw short-term traders from traditional mutual fund shares, allowing existing shareholders to benefit from less trading within the fund – and lower capital gains and trading costs.

Expanding Family

The fund introductions are part of BGI Canada’s plan to expand its iUnits family of ETFs.  BGI Canada has filed a preliminary prospectus for six new iUnits Funds, including a Canadian mid- cap index fund, funds tracking the information technology, energy, financial, and gold sectors, as well as the i60C Fund, an index fund based on the S&P/TSE Capped Index – a constrained market capitalization index.

BGI Canada also unveiled its new Web site at , with enhanced content and services for investors and financial advisors, including:

  • email update service
  • fund tracking features
  • new educational materials
  • academic research on ETFs
  • news articles on ETFs