iShares 5-10 Year Investment Grade Corporate Bond ETF (IGIB)

Summary of iShares 5-10 Year Investment Grade Corporate Bond ETF (IGSB)

Profile: iShares 5-10 Year Investment Grade Corporate Bond ETF is a passively managed exchange-traded fund (ETF) that tracks the ICE BofA US 5-10 Year Corporate Index. This index comprises U.S. dollar-denominated investment-grade corporate bonds with maturities ranging from 5 to 10 years. The ETF seeks to provide broad exposure to the U.S. investment-grade corporate bond market within this specific maturity range.

Objective: The primary investment objective of IGSB is to track the performance of the underlying index. It aims to offer investors a convenient and cost-effective way to gain exposure to the investment-grade corporate bond market while minimizing tracking error.

Issuer:

• Name: BlackRock, Inc. (BLK)
• Reputation and Reliability: BlackRock is the world's largest asset manager, with a strong track record in managing ETFs and other investment products. It is known for its expertise in index-tracking strategies and its commitment to transparency.
• Management: The ETF is managed by a team of experienced portfolio managers who have a deep understanding of the fixed-income market.

Market Share: As of October 26, 2023, IGSB has an estimated market share of 5.7% in the U.S. investment-grade corporate bond ETF industry.

Total Net Assets: Approximately $12.33 billion as of October 26, 2023.

Moat:

• Low Cost: IGSB has a low expense ratio of 0.04%, making it one of the most cost-effective investment-grade corporate bond ETFs available.
• Liquidity: The ETF trades with high daily volume, exceeding 650,000 shares on average. This allows investors to enter and exit positions readily.
• Diversification: The ETF holds a diversified portfolio of over 2,700 individual bonds, providing broad exposure to the investment-grade corporate bond market.

Financial Performance:

• Historical Track Record: IGSB has historically generated returns closely aligned with its benchmark index. The ETF has produced an annualized total return of 3.24% over the past 5 years.
• Benchmark Comparison: The ETF has consistently outperformed its benchmark by a small margin over different timeframes.

Growth Trajectory: The ETF's assets under management have grown steadily over the past years, indicating increasing investor interest in this asset class.

Liquidity:

• Average Trading Volume: Approximately 663,000 shares per day as of October 26, 2023.
• Bid-Ask Spread: The average bid-ask spread is 0.04%, demonstrating high liquidity and low transaction costs.

Market Dynamics:

• Interest Rate Fluctuations: Investment-grade corporate bonds are sensitive to changes in interest rates. Rising interest rates can lead to a decrease in bond prices.
• Creditworthiness of Issuers: The performance of the ETF is directly tied to the creditworthiness of the underlying companies. Downgrades in credit ratings can negatively impact the ETF's value.
• Economic Conditions: The overall performance of the ETF may be influenced by general economic conditions, such as economic growth and inflation.

Competitors:

• Vanguard Intermediate-Term Corporate Bond ETF (VCIT) - 4.9% market share
• iShares Aaa-A Rated Corporate Bond ETF (QLTA) - 4.3% market share
• SPDR Portfolio Intermediate Term Corporate Bond ETF (SPIB) - 2.9% market share

Expense Ratio: 0.04%

Investment Approach and Strategy:

• Strategy: IGSB employs a passive management approach, tracking the ICE BofA US 5-10 Year Corporate Index. The ETF invests in the index constituents in proportion to their weightings in the index.
• Composition: The ETF primarily holds corporate bonds issued by U.S. companies with investment-grade credit ratings and maturities between 5 and 10 years. It also includes a small allocation to U.S. Treasury bonds.

Key Points:

• Low-cost and efficient access to the investment-grade corporate bond market.
• Broad diversification across multiple issuers and industries.
• Suitable for investors seeking income and long-term capital appreciation.

Risks:

• Credit Risk: The ETF's value is subject to changes in the creditworthiness of the underlying companies. It could experience losses if issuers default on their debt obligations.
• Interest Rate Risk: The ETF's price may decline if interest rates rise. Investors should exercise caution if anticipating rising interest rate environments.
• Market Risk: The overall value of the ETF can be impacted by general market fluctuations and economic conditions.

Who Should Consider Investing:

• Investors seeking income and long-term capital appreciation in a diversified portfolio.
• Investors who want exposure to the investment-grade corporate bond market without engaging in active security selection.
• Investors with moderate risk tolerance who understand the potential fluctuations inherent in the bond market.

Fundamental Rating Based on AI: 9.3 out of 10

Justification: IGSB possesses strong fundamentals based on its low expense ratio, diversified portfolio, and track record of closely following its benchmark. The ETF offers investors a compelling option for gaining exposure to the investment-grade corporate bond market. The slight reduction in the score accounts for the potential sensitivity to interest rate changes and credit-related risks.

Resources and Disclaimers:

• iShares 5-10 Year Investment Grade Corporate Bond ETF website: https://www.ishares.com/us/products/239564/ishares-510-year-investment-grade-corporate-bond-etf
• BlackRock Investor Services: https://www.blackrock.com/us/individual/insights/etfs-fundamentals-overview
• Morningstar: https://www.morningstar.com/etfs/arcxps/igsb/quote Disclaimer: This summary is not financial advice. Please consult a professional financial advisor before making investment decisions. The information provided is based on publicly available data and may change over time.