An Intelligent Bond ETF

FIBR may also adjust holdings to achieve a target credit spread risk and interest rate risk for the portfolio. For instance, the fund can take short or long positions in U.S. Treasury futures and short positions in U.S. Treasury securities through interest rate swaps, along with other interest rate futures contracts, like Eurodollar and Federal Funds futures.

“FIBR systematically incorporates strategies used in traditional active portfolios,” said BlackRock in a recent note. “For example, FIBR invests only in asset classes that have historically had high risk-adjusted returns. And FIBR tilts towards higher yielding asset classes and securities. These traditional active strategies are just wrapped up into an index and implemented consistently through time in an ETF.”

FIBR ETF: Effective Duration is 5.04 Years

FIBR has a 30-day SEC yield of 3.10% and a weighted average maturity of 7.13 years. The ETF’s effective duration is 5.04 years. Duration gauges a bond’s sensitivity to changes in interest rates. Over 41% of FIBR’s holdings are rated AAA. Nearly half of the fund’s holdings are rated BBB or BB. Importantly, FIBR offers a credible alternative to standard bond funds when it comes to performance.

“Now that we have three years of return history, we can take a look at the results. Over the three-year period ending February 28, 2018, FIBR was ranked #65 out of 837 funds in the intermediate term bond category, meaning it outperformed 92% of its peers (source: Morningstar, from 2/28/2015 to 2/28/2018). FIBR was awarded 5 out of 5 stars by Morningstar for its 3-year performance,” according to BlackRock.

For more information on the fixed-income space, visit our bond ETFs category