iSHARES iBONDS ETFs

Discover fixed maturity ETFs

Image of aerial view of teapots

WHAT ARE iBONDS ETFs?

iBonds ETFs are an innovative suite of bond funds that have a fixed maturity date. They hold a diversified portfolio of bonds with similar maturity dates, provide regular income payments and distribute a final pay out in their stated maturity year.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Video 02:15

iBONDS: DISCOVER FIXED MATURITY ETFs

Capital at risk

Marketing material 

 

iBonds: Discover fixed maturity ETFs 

Vasiliki Pachatouridi, Head of iShares Fixed Income Product Strategy EMEA

 

What are iBonds ETFs?

iBonds ETFs are an innovative suite of bond ETFs that have a fixed maturity date. An iBond ETF holds a diversified basket of bonds with similar maturity dates, and distributes a final pay out at maturity. 

 

Risk: Diversification and asset allocation may not fully protect you from market risk.

 

Why iBonds ETFs?

Traditional bond ETFs do not have a maturity date, as bonds within the ETF mature, and new bonds are being added. This gives a continuous, rolling exposure to bond markets.


In contrast, like individual bonds, iBonds ETFs have a fixed maturity date. So, there is less exposure to interest rate risk as maturity approaches. This means investors can expect a final repayment at maturity, in addition to regular income.

 

What are the benefits of iBonds ETFs? 

Risk: When interest rates rise, there is usually a decline in the market value of bonds, and the issuer of the bond may not be able to repay and make interest payments.

 

There are a number of benefits of iBonds ETFs.

 

Firstly, iBonds ETFs give easy access to the bond market. Generally, bonds are difficult to trade, as they are not listed on an exchange. With iBonds ETFs, you gain exposure to a basket of bonds with the click of a button – traded on an exchange, just like a stock.

 

Second, iBonds ETFs offer diversification. iBonds track an underlying index and provide exposure to hundreds of bonds, across various sectors and countries.

 

Finally, iBonds ETFs have a fixed maturity date. You can choose your time horizon and invest for a period which works for your needs. iBonds ETFs are available in a range of maturities, meaning you can choose how long you want to invest your money for.

 

In summary, iBonds ETFs allow you to access bond markets in an efficient way, giving exposure to a diversified set of bonds, while incorporating a fixed maturity date.

 

Thanks for watching!

 

This document is marketing material: Before investing, please read the Prospectus and the PRIIPs KID available on www.ishares.com/it, which contain a summary of investors’ rights.

 

Risk Warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

 

In the UK and Non-European Economic Area (EEA) countries: this is issued by BlackRock Advisors (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL, Tel: +44 (0)20 7743 3000. Registered in England and Wales No. 00796793. For your protection, calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

In the European Economic Area (EEA): this is issued by BlackRock (Netherlands) B.V. is authorised and regulated by the Netherlands Authority for the Financial Markets. Registered office Amstelplein 1, 1096 HA, Amsterdam, Tel: 020 – 549 5200, Tel: 31-20-549-5200. Trade Register No. 17068311 For investors in Italy: For your protection telephone calls are usually recorded. For information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in Italian.

 

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

 

© 2023 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, and iSHARES are trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

WHAT ARE iBONDS ETFs DESIGNED TO DO?

             

Icon of clock
Mature like a bond

iBonds have a specified maturity date. The ETFs distribute the final pay out at maturity, similar to traditional bonds.

Icon of revolving arrows
Trade like a stock

iBonds can be bought and sold like a share, giving flexibility to trade in and out over time.

Icon of jar
Diversify like a fund

iBonds provide a diversified bond exposure to a desired asset class in a single trade. Diversification and asset allocation may not fully protect you from market risk.

The unique features of iBonds ETFs can help you easily access bond markets, pick points in time or even match expected cash flow needs in the future.

  • Provide access: iBonds trade on an exchange, giving all investors access to bond markets, traditionally a market difficult to navigate, while maintaining diversification.
  • Pick points in time: iBonds ETFs offer diversified exposure to bonds that mature in the calendar year of the fund's name, allowing you to target specific points on the yield curve.
  • Match expected cash flows: iBonds ETFs offer a defined maturity date that can help match against a liability.

During the holding period of an iBonds ETF

iBonds ETFs are designed to provide a yield-to-maturity ("YTM") profile comparable to that of the underlying bond portfolio. The funds seek to preserve an investor’s anticipated yield-to-maturity through a combination of regular distributions and a final end-date distribution.

When the iBonds ETF matures

iBonds ETFs terminate in December of the year in the fund’s name. In the final months when the bonds in the portfolio mature, the fund's holdings transition to cash and cash equivalents. After all the bonds in the portfolio mature, the ETF is closed and shareholders receive a final distribution equivalent to the fund NAV, after liabilities.

Caption

See how iBonds ETFs compare to other investment tools

FeaturesiBondsFixed income ETFsIndividual bondsMutual funds
Diversified portfolioYesYesNoYes
Rules based methodologyYesYesNoYes
Fixed maturityYesNoYesNo
TradingExchange & OTCExchange & OTCOTC-
Daily transparencyYesYesNoYes

Two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to repay the principal and make interest payments.

Surfboards stacked next to each other

DISCOVER HOW TO USE iBONDS ETFs

Multiple | 25 Sept 2023

Learn more about iBonds ETFs as an alternative for individual bonds.

of articles