EXPLORE iSHARES BOND ETFs

If you're looking for income, you may want to consider investing in bonds, given most make regular income payments in the form of coupons.​

In today's market environment, bonds have become a particularly attractive source of income. Why? At the end of 2021, short-term Treasury bonds offered yields barely above zero.³ After the Fed raised interest rates in 2022 – 2023, the same investments now yield close to 4%,⁴ creating an opportunity to invest in bonds. Investors can find additional opportunities to generate income in specific sectors like high yield and emerging markets.​

The question remains: how can you invest in bonds? Bond ETFs are a low-cost way to access the bond market.​

Yields are up

Generating income is a goal that many investors may seek to pursue through iShares bond ETFs.

You may be missing out on a chance to put your cash to work.​

One way is with short-term bonds, which typically are less sensitive to changes in interest rates. And with today's yields hovering around 4%,⁴ this gives you an opportunity to earn an attractive level of income while aiming to preserving your investment.

Another way is with floating rate bonds whose interest payments adjust to reflect changes in interest rates. In a rising interest rate environment, the interest rate on floating rate bonds also rises which can help you manage your hard-earned cash.

Income opportunities with bond ETFs

(Yield %)

There’s no one-size fits all solution. For many, it helps to think of your cash in layers, and segment it based on how soon you will need to use it. Try segmenting your cash into short, medium and longer-term needs.​

For instance, a segment can be cash that you need as soon as 0-3 months, 3-6 months, in the next 6-18 months, or 18 months and beyond. As a general rule, the sooner you will need to use each segment of your cash, the less risk you may want to take on with an investment.​

Cash that will go unused immediately may be able to earn more interest for you now. The table below outlines a hypothetical cash segmentation framework.​

Cash segmentation strategy sample

Using a short-term investment strategy to park your cash is a goal that many investors may seek to pursue through iShares ETFs. Visit our Explore by Goals experience to see which funds can help you step up from idle cash.

Bonds can provide diversification, an important benefit in highly volatile markets.​

Bonds typically don’t have the same drivers of return as equities, which can help reduce overall risk in a portfolio.​ This means, when equity markets are falling short of expectations, or just falling, your entire investment portfolio may not have to go with it.

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

Hedging against potential market pitfalls through diversification is a goal that many investors may seek to pursue through iShares ETFs. Visit our Explore by Goals experience to see which funds can help you aim to reduce stock risk.

Inflation, as measured by the Consumer Price Index, hit a 40-year high in 2022.⁵ This increase in the cost of goods and services impacted people’s pocketbooks but also investment portfolios.

For example, if a portfolio returns 5% but inflation is 3%, the “real return” (return after accounting for inflation) is only 2%.​⁶

Inflation over time

Treasury inflation protection securities (TIPS) and floating rate bonds are designed to help protect investors from the risk of inflation while short term bonds (short duration) have lower interest rate risk.

Managing inflation risk is a goal that many investors may seek to pursue through iShares ETFs. Visit our Explore by Goals experience to see which funds can help you hedge against rising consumer prices.