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Is iShares Investment Grade Bond Factor ETF (IGEB) a Strong ETF Right Now?
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Designed to provide broad exposure to the Investment Grade Corporate Bond ETFs category of the market, the iShares Investment Grade Bond Factor ETF (IGEB - Free Report) is a smart beta exchange traded fund launched on 07/11/2017.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $248.98 million, which makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. Before fees and expenses, this particular fund seeks to match the performance of the BlackRock Investment Grade Enhanced Bond Index.
The BlackRock Investment Grade Enhanced Bond Index comprises of U.S. dollar-denominated, investment-grade corporate bonds.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for IGEB are 0.18%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.98%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
When you look at individual holdings, Blk Csh Fnd Treasury Sl Agency-4.83% accounts for about 0.85% of the fund's total assets, followed by Targa Resources Partners Lp-4.88%-02-01-2031 and Hsbc Holdings Plc-7.39%-11-03-2028.
IGEB's top 10 holdings account for about 5.75% of its total assets under management.
Performance and Risk
Year-to-date, the iShares Investment Grade Bond Factor ETF return is roughly 2.48% so far, and is down about -2.17% over the last 12 months (as of 05/30/2023). IGEB has traded between $41.26 and $46.16 in this past 52-week period.
The ETF has a beta of 0.29 and standard deviation of 7.03% for the trailing three-year period. With about 409 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Investment Grade Bond Factor ETF is a reasonable option for investors seeking to outperform the Investment Grade Corporate Bond ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Short-Term Corporate Bond ETF (VCSH - Free Report) tracks Bloomberg Barclays U.S. 1-5 Year Corporate Bond Index and the Vanguard Total International Bond ETF (BNDX - Free Report) tracks Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index. Vanguard Short-Term Corporate Bond ETF has $36.31 billion in assets, Vanguard Total International Bond ETF has $48.63 billion. VCSH has an expense ratio of 0.04% and BNDX charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Investment Grade Corporate Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is iShares Investment Grade Bond Factor ETF (IGEB) a Strong ETF Right Now?
Designed to provide broad exposure to the Investment Grade Corporate Bond ETFs category of the market, the iShares Investment Grade Bond Factor ETF (IGEB - Free Report) is a smart beta exchange traded fund launched on 07/11/2017.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $248.98 million, which makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. Before fees and expenses, this particular fund seeks to match the performance of the BlackRock Investment Grade Enhanced Bond Index.
The BlackRock Investment Grade Enhanced Bond Index comprises of U.S. dollar-denominated, investment-grade corporate bonds.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for IGEB are 0.18%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.98%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
When you look at individual holdings, Blk Csh Fnd Treasury Sl Agency-4.83% accounts for about 0.85% of the fund's total assets, followed by Targa Resources Partners Lp-4.88%-02-01-2031 and Hsbc Holdings Plc-7.39%-11-03-2028.
IGEB's top 10 holdings account for about 5.75% of its total assets under management.
Performance and Risk
Year-to-date, the iShares Investment Grade Bond Factor ETF return is roughly 2.48% so far, and is down about -2.17% over the last 12 months (as of 05/30/2023). IGEB has traded between $41.26 and $46.16 in this past 52-week period.
The ETF has a beta of 0.29 and standard deviation of 7.03% for the trailing three-year period. With about 409 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Investment Grade Bond Factor ETF is a reasonable option for investors seeking to outperform the Investment Grade Corporate Bond ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Short-Term Corporate Bond ETF (VCSH - Free Report) tracks Bloomberg Barclays U.S. 1-5 Year Corporate Bond Index and the Vanguard Total International Bond ETF (BNDX - Free Report) tracks Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index. Vanguard Short-Term Corporate Bond ETF has $36.31 billion in assets, Vanguard Total International Bond ETF has $48.63 billion. VCSH has an expense ratio of 0.04% and BNDX charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Investment Grade Corporate Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.