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BlackRock Expands iBonds ETFs

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BlackRock is expanding its lineup of iShares iBonds ETFs, which, unlike most ETFs, have maturity dates like traditional bonds.

The latest addition to its roster of iBonds ETFs is the 2026 Term High Yield and Income ETF (IBHF) composed of U.S. dollar-denominated high-yield and other income-generating corporate bonds that mature between Jan. 1, 2026, and Dec. 15, 2026. Its net expense ratio is 35 basis points, as are all of BlackRock’s other high-yield iBond ETFs. 

With its latest launch, BlackRock now has 37 iBond ETFs, including muni, Treasury and investment-grade corporate as well as high yield ETFs, with a total combined AUM of roughly $10 billion. Expense ratios are seven basis points for the Treasury iBond ETFs, 10 basis points for the investment grade iBond ETFs and 18 basis points for the muni vehicles.

These ETFs haven’t gotten much public attention, but they are used by many wirehouse financial advisors and RIAs, as well as some individual investors, according to Karen Schenone, head of iShares Fixed Income Strategy for BlackRock’s U.S. Wealth Advisory business. iBonds ETFs are an “efficient way to build bond ladders at lower individual minimum,” Schenone tells ThinkAdvisor. 

Investors can buy a single share for about $25, allowing them to build bond ladders for far less than the typical $250,000 – $350,000 that many brokerages and advisory firms would require.

“A lot of SMA platforms have $250,000 minimums for bond ladders but many retirement accounts may not meet those minimums,” Schenone said. She noted that a lot of advisors are using investment-grade corporate iBond ETFs for retirement accounts, which have required minimum distributions. 

Another advantage of iBonds: They pay interest monthly instead of twice a year as most bonds do.

BlackRock launched the first iBond ETF, a muni vehicle, in January 2010 and currently introduces one new iBond ETF in each of its four categories every year while closing another that has reached maturity.

Invesco has a similar product, known as BulletShares, which it acquired from its 2017 purchase of Guggenheim Investments’ ETF business. The expense ratios on Invesco’s high-yield and investment grade products, however, are slightly higher than those of BlackRock’s iBonds ETFs  — 42 and 18 basis points, respectively.

— Check out World’s Top 20 Biggest Asset Managers: 2020 on ThinkAdvisor.


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