About 61% of IUSB’s holdings are rated AAA and the ETF features little exposure to bonds with non-investment grade ratings. Over 55% of the fund’s holdings are Treasuries or mortgage-backed-securities (MBS).
“Although the fund’s duration is similar to the category average, it has considerable exposure to interest-rate risk. Its duration of 5.3 years implies that if the rate rises by 1 percentage point, in theory this fund would lose approximately 5.3% of its value,” according to Morningstar.
Morningstar has a Silver rating on IUSB. The ETF is lower by 2.37% this year as the Federal Reserve raised interest rates in March and plans to do the same several more times in 2018.
For more on the bond market, visit our fixed income channel.