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BOND ETF 101

A LOW-COST SOLUTION FOR TODAY’S BOND MARKET

In today’s yield-starved world, consider a way to help offset equity risk, preserve capital and seek income.

THE BENEFITS OF BOND ETFs

Competitive performance

COMPETITIVE PERFORMANCE

iShares bond ETFs have outperformed 48% of their peers over the last 3 years.1

Low cost

LOW COST

On average, iShares bond ETFs cost 79% less than active mutual funds.2

Liquidity when you need it

LIQUIDITY

Bond ETFs trade thousands of times throughout the day on the exchange, while individual bonds may not trade daily.3

BOND ETFs ARE THE FASTEST GROWING SEGMENT OF THE BOND MARKET

Bond market chart

Bloomberg 12/31/2021.

Over the last two decades, falling interest rates have made buying a home so much easier. 

The reverse has happened with portfolio construction – low interest rates tend to make building portfolios more complex.

But today, with rates so low, you need to think harder about what role you want bonds to play in your portfolio, because no one bond fund can do it all.

Core bonds can diversify equities providing protection when stocks sell off.

Low duration and flexible funds seek capital preservation, looking for consistent returns across all markets.

While high yield funds can generate high income.

So what's the right bond mix for your portfolio? Here's where some investors get stuck.

One common mistake is many investors who take an aggressive approach to their stock portfolio tend to buy aggressive bonds, adding high yield to their equity-heavy portfolio.

But this is the opposite of what they should do, because, as your overall portfolio allocation gets more aggressive the bonds within it actually need to be more conservative.

We call this “The Bond Paradox.”

That’s where the BlackRock Bond Pyramid comes in - here's how it works.

An aggressive equity investor needs their limited bond allocation to diversify stocks. That means they should consider owning conservative bonds with high credit quality and longer duration.

On the other hand, a conservative investor who has less stock risk may want to dip more into credit and higher income bond funds for yield.

The BlackRock Bond Pyramid makes it easy to tailor your bonds to your overall asset allocation.

Start building a better bond portfolio today!

Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting the Funds’ prospectus pages on ishares.com and blackrock.com. Read the prospectus carefully before investing.

How to blend bond ETFs and active funds

The BlackRock Bond Pyramid showcases ways to blend active funds with bond ETFs to help meet portfolio goals or prepare for changing markets.

iSHARES BOND ETFs

Whether your clients' goals are equity diversification, capital preservation or income, iShares bond ETFs can help you meet their needs.

DIVERSIFY EQUITY RISK

Broad market bond ETFs can offer low correlation relative to stocks, which can help reduce overall risk in a portfolio.

Net Asset Value
USD 102.56
YTD Nav Return
-9.59%
Net Asset Value
USD 111.42
YTD Nav Return
-15.31%
Net Asset Value
USD 104.47
YTD Nav Return
-9.52%
PRESERVE CAPITAL

Try to earn a little more from your cash with short duration bond ETFs.

Net Asset Value
USD 49.42
YTD Nav Return
-0.83%
Net Asset Value
USD 47.72
YTD Nav Return
-4.84%
Net Asset Value
USD 50.80
YTD Nav Return
-5.14%
SEEK INCOME

Seek a higher level of income with high yield bonds, emerging market debt, or preferred stocks.

Net Asset Value
USD 35.91
YTD Nav Return
-10.92%
Net Asset Value
USD 88.68
YTD Nav Return
-16.75%
Net Asset Value
USD 33.04
YTD Nav Return
-14.86%
Performance data represents past performance and does not guarantee future results. Investment return and principal value will fluctuate with market conditions and may be lower or higher when you sell your shares. Current performance may differ from the performance shown. For most recent month-end performance and standardized performance, click on the fund ticker above.
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