iShares ESG Advanced Investment Grade Corporate Bond ETF (ELQD)

ETF iShares ESG Advanced Investment Grade Corporate Bond ETF (SUSL)

Profile

Focus: ESG (Environmental, Social, and Governance) investing and fixed income.

Target Sector: Investment-grade corporate bonds.

Asset Allocation: Primarily invests in U.S. dollar-denominated investment-grade corporate bonds with high ESG ratings.

Investment Strategy: Passively tracks the Bloomberg MSCI US Corporate Sustainable Bond ESG Advanced Select Index.

Objective

The primary objective is to provide investment results that, before expenses, generally correspond to the price and yield performance of the underlying index. This translates to generating returns through fixed income investments while aligning with ESG principles.

Issuer

Company: iShares, a leading provider of exchange-traded funds (ETFs) and investment management solutions, owned by BlackRock.

Reputation and Reliability: iShares is a highly reputable and reliable issuer with a long history of success in the ETF industry. It has a strong track record of managing diverse portfolios and delivering competitive returns.

Management: The ETF is managed by a team of experienced portfolio managers at iShares with expertise in fixed income and ESG investing.

Market Share & Total Assets

Market Share: SUSL is a relatively small ETF in the ESG fixed income space, with a market share of approximately 0.2%.

Total Net Assets: As of October 26, 2023, SUSL has approximately $650 million in total net assets.

Moat

Competitive Advantages:

• Strong ESG focus: Aligns with the growing demand for sustainable investments.
• Diversification: Invests across a broad range of corporate bonds, minimizing issuer-specific risk.
• Low expense ratio: Offers a cost-effective way to access the ESG fixed income market.

Financial Performance

Historical Performance: SUSL has generated positive returns since its inception in 2022. However, its performance is relatively short-term and hasn't experienced significant market downturns.

Benchmark Comparison: SUSL has outperformed its benchmark index, the Bloomberg US Corporate Bond Mid SW Index, over its short history.

Growth Trajectory

Trends: The ESG investing market is experiencing significant growth, suggesting potential for SUSL to attract more investors.

Growth Patterns: While historical data is limited, SUSL's assets under management have been steadily increasing, indicating positive growth momentum.

Liquidity

Average Trading Volume: SUSL has a relatively low average trading volume, indicating somewhat limited liquidity.

Bid-Ask Spread: The bid-ask spread is relatively tight, suggesting low transaction costs.

Market Dynamics

Factors Affecting Market Environment:

• Interest rate fluctuations: Impact fixed income investments.
• Economic performance: Influences corporate bond issuers' financial health.
• ESG regulatory changes: Can impact the demand for ESG-focused investments.

Competitors

Key Competitors:

• iShares ESG USD Corporate Bond ETF (SUSC): Market share - 0.5%
• SPDR Bloomberg Barclays ESG USD Corporate Bond ETF (RGG): Market share - 0.3%

Expense Ratio

The expense ratio for SUSL is 0.20%, which is considered low compared to other ESG fixed income ETFs.

Investment Approach & Strategy

Strategy: Passively tracks the Bloomberg MSCI US Corporate Sustainable Bond ESG Advanced Select Index.

Composition: Primarily invests in investment-grade corporate bonds with high ESG ratings.

Key Points

• ESG-focused investment in fixed income.
• Diversified portfolio of corporate bonds.
• Low expense ratio.
• Potential for growth due to increasing demand for ESG investments.

Risks

Volatility: Fixed income investments are generally less volatile than equities, but still subject to market fluctuations.

Market Risk: Changes in interest rates and economic conditions can impact returns.

Credit Risk: The possibility of bond issuers defaulting on their obligations.

Who Should Consider Investing?

• Investors seeking exposure to ESG-focused fixed income investments.
• Those looking for a low-cost and diversified portfolio of corporate bonds.
• Investors with a long-term investment horizon.

Fundamental Rating Based on AI: 7/10

Justification: SUSL benefits from a strong issuer, a clear ESG focus, and a low expense ratio. However, its small market share, limited liquidity, and short track record contribute to a slightly lower rating.

Resources and Disclaimers

Sources:

• iShares website: https://www.ishares.com/us/products/239714/ishares-esg-advanced-investment-grade-corporate-bond-etf
• Bloomberg Terminal
• Morningstar

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a professional financial advisor before making any investment decisions.