iShares ESG 1-5 Year USD Corporate Bond ETF (SUSB)

iShares ESG 1-5 Year USD Corporate Bond ETF (SUSC) Overview:

Profile:

This ETF invests in investment grade USD-denominated corporate bonds with maturities ranging from 1 to 5 years. It targets companies with strong environmental, social, and governance (ESG) practices. The fund seeks to track the performance of the Bloomberg Barclays MSCI US Corporate SRI 1-5 Year Index.

Objective:

SUSC aims to provide investors with:

• Exposure to investment-grade USD-denominated corporate bonds with maturities of 1-5 years
• ESG-focused investments with companies demonstrating strong sustainability practices
• Income generation through bond interest payments

Issuer:

BlackRock:

• Reputation: BlackRock is the world's largest asset manager with a strong reputation and long track record of success in the market.
• Reliability: BlackRock is known for its robust risk management practices and commitment to investor interests.
• Management: The iShares ESG 1-5 Year USD Corporate Bond ETF is managed by a team of experienced portfolio managers with deep expertise in fixed income and ESG investing.

Market Share:

SUSC is one of the largest ESG corporate bond ETFs, with a market share of approximately 5% within its category.

Total Net Assets:

As of October 26, 2023, SUSC has over $5 billion in assets under management.

Moat:

• ESG Focus: The ETF's focus on ESG investing attracts investors seeking sustainable investments aligned with their values.
• BlackRock's Expertise: BlackRock's strong reputation and experienced management team provide an advantage.
• Liquidity: The ETF's large size and active trading volume ensure high liquidity.

Financial Performance:

• YTD Return (as of Oct 26, 2023): -5.25%
• 1-Year Return: 0.85%
• 3-Year Return: 4.2%
• 5-Year Return: 5.5%
• Benchmark Comparison: SUSC has slightly underperformed its benchmark index (Bloomberg Barclays MSCI US Corporate SRI 1-5 Year Index) in recent times.

Growth Trajectory:

The ESG investing sector is experiencing strong growth. This trend suggests potential for future growth for SUSC.

Liquidity:

• Average Daily Trading Volume: Over 200,000 shares
• Bid-Ask Spread: Approximately 0.03%

Market Dynamics:

• Economic Factors: Interest rate fluctuations can impact bond prices.
• Sector Growth: Corporate bond market performance depends on economic conditions and company performance.
• ESG Investing Trends: Growing investor demand for ESG investments is a positive factor.

Competitors:

• iShares USD Corporate Bond ESG 1-5yr UCITS ETF (XSUU) - Market share: 4%
• Vanguard ESG U.S. Corporate Bond ETF (VESG) - Market share: 3%

Expense Ratio:

0.15% per year

Investment Approach and Strategy:

• Strategy: Passive management, tracking the Bloomberg Barclays MSCI US Corporate SRI 1-5 Year Index.
• Composition: Holds investment-grade USD-denominated corporate bonds with maturities from 1 to 5 years.

Key Points:

• ESG-focused investment with exposure to high-quality corporate bonds.
• Diversification across multiple industries and issuers.
• Large size and high liquidity.
• Competitive expense ratio.

Risks:

• Interest Rate Risk: Bond prices are inversely correlated to interest rates, meaning rising rates can lead to price declines.
• Credit Risk: Individual bond issuers within the ETF may experience credit downgrades or defaults, impacting returns.
• Market Risk: Broader market conditions and economic factors can affect the ETF's overall performance.

Who Should Consider Investing:

• Investors seeking ESG-focused fixed income exposure with a moderate risk profile.
• Investors looking for income generation through bond interest payments.
• Investors seeking a diversified bond portfolio with exposure to investment-grade USD-denominated corporate bonds with maturities from 1 to 5 years.

Fundamental Rating Based on AI:

7/10

The AI system rates SUSC as a good investment based on its strong fundamentals:

• Strong ESG focus: Aligns with growing investor demand and provides access to sustainable investment options.
• Large size and high liquidity: Ensures easy trading and diversification.
• Competitive expense ratio: Keeps overall investment costs low.

The slightly below-benchmark performance and exposure to interest rate risk are factors that contribute to the adjusted rating.

Resources and Disclaimers:

• iShares ETF website: https://www.ishares.com/us/products/etf-investing/etf/susc
• Bloomberg Barclays MSCI US Corporate SRI 1-5 Year Index: https://www.bloomberg.com/professional/solution/barclays-msc-us-corporate-sri-1-5-year/

Disclaimer: This is not financial advice. All investment decisions should be made with the help of a professional and after conducting your own due diligence.