EXPLORE iSHARES BOND ETFs

WHY INVEST IN iSHARES BOND ETFs?

Just as equity ETFs give investors access to baskets of stocks, bond ETFs do the same with the bond market, while offering similar benefits:

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Competitive performance

iShares bond ETFs have outperformed the majority of their peers over the last year.1
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Low cost

On average, iShares bond ETFs cost 77% less than active mutual funds helping you keep more of what you earn.2

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Easy to use

Bond ETFs simplify access to the bond market by making investing as easy as buying a stock.

PURSUE YOUR GOALS WITH BOND ETFs

iShares bond ETFs are designed with your goals in mind. Select from the options below to see which ETFs could be the best fit: ​

HOW CAN BOND ETFs HELP YOU GENERATE INCOME?

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

 
Bar chart showing bond yields over a 9 month period.

Source: BlackRock and Bloomberg as of 8/31/2024. All yields shown are yields to worst. U.S. treasury bonds represented by the ICE US Treasury Core Bond Index, Core bonds represented by the Bloomberg US Aggregate Bond Index, Corporate bonds represented by the Markit iBoxx USD Liquid Investment Grade Index, Emerging market bonds represented by the J.P. Morgan EMBI Global Core Index, and High yield bonds represented by the Markit iBoxx USD Liquid High Yield Index.

 

Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

Chart description: Bar chart showing the increase in yields for major fixed-income indexes from 12/31/2021 through 8/31/2024.

Generating income is a goal that many investors may seek to pursue through iShares bond ETFs.
EXPLORE BOND ETFs WITH YIELD POTENTIAL

PUT YOUR CASH TO WORK

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 %)
Bar chart showing a comparison of yields currently available on various short-term products.

Source: BlackRock, FDIC, iMoneyNet, as of 8/31/2024. Govt Money Market Funds yield is the average 1-day simple net yield for government-only money market funds. Bond ETF yields are yield to maturity. This information must be preceded or accompanied by a prospectus for the iShares funds.

 

Performance data represents past performance and does not guarantee future results. Investment return and principal value will fluctuate with market conditions and may be lower or higher when you sell your shares. Current performance may differ from the performance shown. For a prospectus, standardized performance and most recent month end performance, click on the fund’s ticker symbol; SGOV, SHV, TFLO, FLOT.

“Money Market Fund” represents 2a-7 Money Market Funds and is calculated using the Weighted Average 7-Day Yield of the Morningstar “Money Market – Taxable” Category. “Savings Account” and “12 Month Bank CD” are the average APY rate of all FDIC-insured savings and 12-month bank CDs. iShares and BlackRock ETF yields represent the 30-Day SEC Yield. It’s important to note that there are material differences between Savings accounts, Money Market Funds, CDs and ETFs, including investment objectives, risks, fees, and expenses. CDs are fixed income investments that generally pay a set rate of interest over a fixed time period until maturity, whereupon the original principal is typically returned plus any interest earned. Early withdrawal from CDs may result in early withdrawal fees. Most savings accounts pay compound interest, meaning earnings are added to the balance to create a larger base on which future interest is paid. Most savings accounts allow you to add or withdraw money at any time without incurring a fee. Both Savings accounts and CDs principal investments are insured by the FDIC up to applicable FDIC limits, while ETFs are not FDIC insured and may lose value. Money Market funds typically seek to maintain a net asset value of $1.00 per share, but there is no guarantee they will do so and are not FDIC insured. Most ETFs seek to track an index, before fees and expenses. ETFs trade on exchanges intraday at market price, which may be greater or less than net asset value. Transactions in shares of ETFs may result in brokerage commissions and may generate tax consequences. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained. Short duration bond ETFs typically carry a higher degree of risk than the other cash alternatives and should not always be used as a substitute.

 

Chart description: Bar chart showing a comparison of yields currently available on various short-term products.

WAYS TO INVEST EXCESS CASH

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
Caption:

Hypothetical cash segmentation framework
Time horizonWill need it any day now < 3 MonthsEmergency fund 3-6 MonthsSaving for something big > 6 Months
Biggest priorityCapital preservationStability with incremental incomeLow risk with current income
Investment typeTreasury bills, bonds or floating rate notes.Short term bonds with maturity dates or duration (interest rate risk) less than 12 months. Fixed or floating rate bonds with maturities of less than 5 years.
Potential strategySGOV, TFLOSHV, ICSHFLOT, NEAR

The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.

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.
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DIVERSIFY WITH BONDS

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
Caption:

5-year correlation, return and risk for AGG, IUSB and USIG
iShares Core U.S. Aggregate Bond ETF (AGG)iShares Core Total USD Bond Market ETF (IUSB)iShares Broad USD Investment Grade Corporate Bond ETF (USIG)
5-year correlation0.550.610.72
5-year return-0.07%0.32%0.76%
5-year risk6.27%6.27%8.72%

Source: BlackRock as of 8/31/2024. Correlation to equities is based on the 5-year correlation with the S&P 500 Index. Risk and Return based on 5-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. Standard Deviation measures how dispersed returns are around the average. A higher standard deviation indicates that returns are spread out over a larger range of values and thus, more volatile.

The performance quoted represents past performance and 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 and most recent month end performance, click on the ticker symbol: AGG IUSB USIG.

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.
EXPLORE BROAD MARKET BOND ETFs

POSITION YOUR PORTFOLIO AGAINST INFLATION WITH BOND ETFs

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
Bar chart showing inflation is higher than average.

Source: Bureau of Labor Statistics, as of 8/31/2024.

Chart description: Bar chart showing average U.S. inflation rates since the 1990s vs. the long-term average of 3.03%.

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.
EXPLORE BOND ETFs TO HELP MANAGE INFLATION RISK