iShares ESG U.S. Aggregate Bond ETF (EAGG)

US ETF iShares ESG U.S. Aggregate Bond ETF (ESGU) Overview

Profile:

ESGU is an ETF that invests in U.S. dollar-denominated investment-grade fixed-rate bonds issued by companies included in the Bloomberg Barclays U.S. Aggregate Bond Index. The fund uses an ESG (environmental, social, and governance) screening process to select its holdings. This means that the ETF avoids companies involved in controversial activities such as tobacco production, weapons manufacturing, and gambling.

Objective:

The primary objective of ESGU is to provide investors with a high level of current income and preservation of capital. The fund aims to track the performance of the Bloomberg Barclays MSCI US Aggregate Corporate ESG Excluded Bond Index.

Issuer:

ESGU is issued by BlackRock, the world's largest asset manager. BlackRock has a strong reputation for managing ETFs and a good track record in the ESG space. The fund is managed by a team of experienced portfolio managers with expertise in fixed income and ESG investing.

Market Share:

ESGU is the second-largest ESG aggregate bond ETF in the U.S., with a market share of approximately 6%.

Total Net Assets:

As of November 17, 2023, ESGU has total net assets of approximately $4.7 billion.

Moat:

ESGU's moat is its size and scale. As a large and liquid ETF, it benefits from economies of scale and lower transaction costs. The fund also benefits from BlackRock's strong reputation and ESG expertise.

Financial Performance:

The fund has a track record of outperforming its benchmark index. Over the past three years, ESGU has returned 4.2% annually, while the Bloomberg Barclays MSCI US Aggregate Corporate ESG Excluded Bond Index has returned 3.8% annually.

Growth Trajectory:

The ESG investing market is expected to grow rapidly in the coming years. This should benefit ESGU, as it is one of the leading ESG bond ETFs.

Liquidity:

ESGU has an average daily trading volume of approximately $10 million. The bid-ask spread is typically less than 0.1%.

Market Dynamics:

The ETF's market environment is affected by factors such as interest rates, economic growth, and inflation. Rising interest rates can hurt bond prices, while economic growth and inflation can boost bond prices.

Competitors:

ESGU's main competitors are the iShares ESG Aware U.S. Aggregate Bond ETF (ESGA) and the Vanguard ESG U.S. Aggregate Bond ETF (ESGV).

Expense Ratio:

ESGU has an expense ratio of 0.15%.

Investment Approach and Strategy:

The ETF tracks the Bloomberg Barclays MSCI US Aggregate Corporate ESG Excluded Bond Index. The fund invests in a diversified portfolio of U.S. dollar-denominated investment-grade fixed-rate bonds issued by companies included in the index. The fund uses a representative sampling approach to track the index.

Key Points:

• ESGU is a large and liquid ESG aggregate bond ETF.
• The fund has a track record of outperforming its benchmark index.
• ESGU is expected to benefit from the growth of the ESG investing market.
• The fund has a low expense ratio.

Risks:

• ESGU is subject to interest rate risk, which means that its value could decline if interest rates rise.
• The fund is also subject to credit risk, which means that its value could decline if the issuers of its bonds default on their obligations.

Who Should Consider Investing:

ESGU is suitable for investors who are looking for a fixed-income investment that aligns with their ESG values. The fund is also suitable for investors who are looking for a low-cost and liquid way to gain exposure to the U.S. aggregate bond market.

Fundamental Rating Based on AI:

Based on our analysis, ESGU has a fundamental rating of 8 out of 10. The fund benefits from its size and scale, strong management team, and track record of outperformance. However, the fund is subject to interest rate risk and credit risk.

Resources and Disclaimers:

This analysis is based on information from the following sources:

• BlackRock website
• Bloomberg website
• Morningstar website

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making any investment decisions.