iSHARES iBONDS ETFs

Discover fixed maturity ETFs.

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WHAT ARE iBONDS ETFs?

iBonds ETFs (Exchange Traded Funds) are an innovative suite of bond funds that have a fixed maturity date. They hold a diversified portfolio of bonds with similar maturity dates, are designed to provide regular income payments and distribute a final payment in their stated maturity year. For more information on the final payment see the below section on ‘when the iBonds ETF matures’.

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.

WHAT ARE iBONDS ETFs DESIGNED TO DO?

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Mature like a bond

iBonds have a specified maturity date. The ETFs distribute the final payment at maturity, similar to traditional bonds.
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Trade like a stock

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

BENEFITS OF iBONDS ETFs

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

  • Diversified access to bond markets - 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 mature at a specific date. So, investors could expect a final payment at maturity, which could help fund life stage planning, such as buying a car or a house, college tuition or retirement.

iBonds ETFs combine the best features of individual bonds and ETF investing offering investors an efficient tool that matures like an individual bond while trading on an exchange at low cost like a traditional bond ETF.
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.

At time of purchase of the iBonds ETF

When you are ready to purchase an iBonds ETF, we have tools to help you understand the estimated net acquisition yield of the fund. The estimated net acquisition yield provides a yield estimate, net of fees and market price impact, if the fund is held to maturity.

On each iBonds ETFs product page, the Estimated Net Acquisition Yield Calculator can provide a yield estimate if you enter a projected market price.
Image of Estimated Net Acquisition Yield Calculator

For illustrative purposes only.

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 (maturity transition period), 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 payment.

The final payment that an investor will receive includes the initial investment (principal amount) along with any income generated by the ETF, such as interest payments from the underlying bonds. The fund’s liabilities such as fees and accrued expenses will get deducted from this final payment.
Image showing how iBonds ETFs work.
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? 

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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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.

 

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.

 

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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.

 

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