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BlackRock Inc. is launching its first smart beta bond exchange-traded fund (ETF), which will adjust the holdings of a bond index ETF so that overall credit risk and interest rate risk are equally balanced. "For U.S.-based investors, rate risk and credit risk are the primary drivers of returns," Matt Tucker, BlackRock's head of iShares fixed-income strategy, told Reuters . Smart beta funds, which use quantitative factors to weigh holdings, have been a growing trend in equity ETFs and have recently begun expanding into the fixed-income side as well. In an article in Forbes last August , Charles Rotblut, vice president of the American Association of Individual Investors and AAII Journal editor, identified 59 domestic smart beta ETFs, but only 27 of them had a five full years of return data at the time of publication. The new BlackRock ETF, which launches today, is called the iShares Fixed Income Balanced Risk ETF. It will include mortgages, investment-grade corporate bonds with maturities between one and five years and five and ten years and high-yield bonds rated BB or below, and it will also use U.S. Treasury futures to adjust its interest rate risk to match credit risk, Reuters reported.