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What can bond ETFs do for you?

Diversify your equities

Bonds can provide income and capital preservation for investors, but they may also add valuable diversification and risk reduction benefits when part of an equity portfolio.

Is your portfolio really diversified?

With the stock market near record highs after years of gains, the diversification benefits that bonds can provide may become increasingly important in the case of a market downturn.

Investing in bond funds that have signifigant allocations to riskier sectors like high yield bonds can come at the cost of increased correlations with equities. Broad market bond ETFs can offer low correlation relative to stocks, which can help reduce overall risk in a portfolio.

Simple and low-cost, ETFs are single trade solutions to invest in bonds across a wide-ranging set of market sectors and industries.

Bond building blocks to help diversify your portfolio

 

AGGIUSBLQD
iShares Core U.S. Aggregate Bond ETFiShares Core Total USD Bond Market ETFiShares iBoxx $ Investment Grade Corporate Bond ETF
Correlation to Equities -0.15 -0.05 0.17
3-Year Return 2.89% 3.15% 4.69%
3-Year Risk 3.35% 3.11% 5.13%

Source: BlackRock as of 9/30/19. Correlation to equities is based on the 3-year correlation with the S&P 500 Index. Risk and Return based on 3-year annualized NAV return and standard deviation. Correlation measures how two securities move in relation to each other. Correlation ranges between +1 and -1. A correlation of +1 indicates returns moved in tandem, -1 indicates returns moved in opposite directions, and 0 indicates no correlation. Past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. For standardized performance, click here.