iBONDS ETFs

Discover fixed maturity ETFs.

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WHAT ARE iBONDS ETFs?

iBonds ETFs are bond ETFs that have a fixed maturity date. An iBonds ETF holds a diversified basket of bonds with similar maturity dates and distributes a final payment at maturity. For more information on the final payment see the below section on ‘when the iBonds ETF matures’.

iBonds ETFs combine the benefits of investing in ETFs and individual bonds, offering an efficient tool that matures like an individual bond, while trading on a stock exchange at low cost.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

DISCOVER OUR LATEST iBONDS ETFs LAUNCHES
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Investment grade corporate iBonds ETFs

Explore our new iBonds € and $ investment grade corporate 2035 maturities. With an offering spanning 10 years, the funds allow investors to build scalable bond ladders.

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€ Crossover Corporate iBonds ETFs

Explore our new iBonds € Crossover Corporate ETFs — offering access to a basket of investment grade and high yield corporate bonds maturing in the same year.

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$ Corporate high yield iBonds ETFs

Explore our new iBonds $ High yield corporate ETFs — offering access to a basket of high yield corporate bonds maturing in the same year.

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WHAT ARE iBONDS ETFs DESIGNED TO DO?

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Mature like a bond

iBonds have a specified maturity date. The ETFs distribute the final payment at maturity, similar to traditional bonds.*
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Trade like a stock

iBonds trade on stock exchanges, just like single stocks. ETFs also offer flexibility to enter and exit a trade at any time during trading hours.
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Diversify like a fund

iBonds offer investors access to multiple bonds in one trade, helping diversify their investments and avoid the risk of exposure to one single issuer.

Risk: Diversification and asset allocation may not fully protect you from market risk.

*The final payment that an investor will receive includes the initial investment (principal amount) along with any income generated by the ETF, such as interest payments from the underlying bonds. The fund’s liabilities such as fees and accrued expenses will get deducted from this final payment.

Two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to repay the principal and make interest payments.

BOND LADDERING MADE EASY WITH iBONDS ETFs

Investors like the concept of bond ladders for the predictable cash flow they provide as bonds mature at regular intervals. iBonds ETFs make bond laddering simpler and more time-efficient vs. having to research, purchase and track individual bonds.
Diagram showing how bond ladders work.

Bond laddering is a fixed income investment strategy designed to manage cash flows and provide a consistent stream of income. The idea is you buy a series of bonds that mature in consecutive calendar years. Then when the shortest-duration bonds mature, you buy the following year, creating a "ladder" of bonds. e.g., 1 year, 3 years, 5 years, etc.

This approach helps mitigate the impact of interest rate fluctuations and aims to ensure regular income by providing a mix of short- and long-term bonds. Bond laddering can also be applied to bond ETFs, which follow the same concept of diversifying maturity dates.

Risk: Diversification and asset allocation may not fully protect you from market risk.

Regular Income stream: The bond ladder strategy could offer pre-planned income, as bonds mature at different times and generate regular distributions in addition to receiving a final payment when each iBond matures, seeking to ensure consistent cash flow for investors.

Liquidity management: With a pre-planned stream of income, investors can use bond laddering to meet their liquidity needs or outgoing cash flows using iBonds.

Flexibility: Bond laddering lets you spread out when your money comes back to you, which gives you more control over your investments. If your needs change (say you want more coming in later), you can adjust your ladder accordingly.

For example, you might want to use iBonds that mature later to match future university costs. Building a bond ladder can help you plan ahead for these situations.

Reduce risk: By spreading out maturities over multiple iBonds, investors can reduce the impact of fluctuating interest rates.

If interest rates rise, you can reinvest the money from bonds that have matured into new ones that pay more. If interest rates fall, then you still have some older bonds in your portfolio that are paying the higher rates from before.

This way, you’re not putting all your money in at once, and you don’t lose out if rates change.

iBonds ETFs enable investors to build scalable bond ladders without the time-consuming and potentially costly effort to research and purchase numerous individual bonds. Each iBond ETF matures in December of its calendar year, and when it matures, you can then purchase the next calendar year, as illustrated above.

Reinvest Coupons - Use in conjunction with individual bonds to put coupons to work. Instead of hunting for odd lots of small bonds, you can just sweep the extra cash into a corresponding iBonds ETFs.

BENEFITS OF iBONDS ETFs

The unique features of iBonds ETFs can help you access bond markets, pick points in time, or could even match expected cash flow needs in the future.

  • Easily access bonds – iBonds ETFs provide easy access to bonds, with one trade, you gain exposure to a selection of bonds and could generate regular income.
  • Be flexible – iBonds ETFs are available in a range of maturities, so you can choose how long you want to invest your money for. If your needs change, so can your investment. You can buy or sell iBonds ETFs at any time on the stock exchange (during trading hours).
  • Diversify at low cost – iBonds ETFs provide exposure to a selection of bonds across various regions and parts of the bond market, at relatively low cost compared to trading individual bonds.
  • Match expected cash flows - iBonds ETFs mature at a specific date. So, investors could expect a final payment at maturity, which could help fund life stage planning, such as buying a car or a house, college tuition or retirement.

iBonds ETFs combine the best features of individual bonds and ETF investing offering investors an efficient tool that matures like an individual bond while trading on an exchange at low cost like a traditional bond ETF.
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See how iBonds ETFs compare to other investment tools:
FeaturesiBonds ETFsTraditional bond ETFsIndividual bonds
Diversified (Exposure to a basket of bonds)YesYesNo
Known maturity date (Matures at a fixed date)YesNoYes
Trades on a stock exchange (How easy you can buy and sell)YesYesNo

Two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to repay the principal and make interest payments.

What happens at the time of purchase of an iBonds ETF?

When you are ready to purchase an iBonds ETF, we have tools to help you understand the estimated net acquisition yield of the fund. The estimated net acquisition yield provides a yield estimate, net of fees and market price impact, if the fund is held to maturity.

On each iBonds ETFs product page, the Estimated Net Acquisition Yield Calculator can provide a yield estimate if you enter a projected market price.
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For illustrative purposes only.

What happens during the holding period of an iBonds ETF?

iBonds ETFs are designed to provide a yield-to-maturity ("YTM") profile comparable to that of the underlying bond portfolio. The funds seek to preserve an investor’s anticipated yield-to-maturity through a combination of regular coupon distributions (regular payment that bond holders provide for lending their money to the bond issuer) and a final payment.

Yield to maturity (YTM) is a financial term used to describe the total return anticipated on a bond if it's held until its maturity date.

What happens when the iBonds ETF matures?

iBonds ETFs terminate in December of the year in the fund’s name. In the final months when the bonds in the portfolio mature (maturity transition period), the fund's holdings transition to cash securities and cash equivalents (such as treasury bills and commercial papers). After all the bonds in the portfolio mature, the ETF is closed and shareholders receive a final payment.