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iBonds exchange-traded funds (“ETFs”) are an innovative suite of bond funds that hold a diversified portfolio of bonds with similar maturity dates. Each ETF provides regular interest payments and distributes a final payout in its stated maturity year, similar to traditional bond laddering strategies. However, the funds’ unique structure is designed to help investors easily build bond ladders with only a handful of funds
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.
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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.
INCLUDE DISCLOSURES FOR LATAM HERE - IN REVIEW WITH COMPLIANCE
© 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.
iBonds have a specified maturity date. The ETFs distribute the final pay out at maturity, similar to traditional bonds.
iBonds can be bought and sold like a share, giving flexibility to trade in and out over time.
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.
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.
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.
| Features | iBonds | Fixed income ETFs | Individual bonds | Mutual funds |
|---|---|---|---|---|
| Diversified portfolio | Yes | Yes | No | Yes |
| Rules based methodology | Yes | Yes | No | Yes |
| Fixed maturity | Yes | No | Yes | No |
| Trading | Exchange & OTC | Exchange & OTC | OTC | - |
| Daily transparency | Yes | Yes | No | Yes |
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.
The information contained herein is for informational purposes only and is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. An assessment should be made as to whether the information is appropriate for you having regard to your objectives, financial situation and needs. Reliance upon information in this material is at the sole discretion of the reader Investment implies risk, including the possible loss of principal.
Carefully consider the iShares and Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds’ prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.BlackRock.com. Read the prospectus carefully before investing.
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