BlackRock’s iShares expanded its suite of corporate debt iBonds target-date ETFs to help fixed-income investors extend a corporate bond ladder strategy in a rising interest rate environment.
BlackRock recently launched the iShares iBonds Dec 2028 Term Corporate ETF (NYSEArca: IBDT), which has a 0.10% expense ratio.
“iBonds ETFs are a suite of bond funds that hold a diversified portfolio of bonds with similar maturity dates. iBonds ETFs have a final payout in their maturity year and have regular interest payments. iBonds ETFs combine the features of individual bonds, the tradability of stocks, and the diversification of funds,” according to iShares.
The iShares iBonds Dec 2028 Term Corporate ETF tries to reflect the performance of the Bloomberg Barclays December 2028 Maturity Corporate Index, which is composed of U.S. dollar-denominated, investment-grade corporate bonds maturing on or about December 15, 2028, according to the ETF’s prospectus. When the bonds mature, the fund will distribute its remaining net assets to shareholders pursuant to a plan of liquidation.
These defined-maturity bond funds typically buy bonds that mature in the year the ETF will terminate, ensuring that investors can collect the bonds’ face value at maturity, along with a steady income stream along the way. Consequently, investors are meant to buy-and-hold these securities until maturity.