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Is iShares Investment Grade Bond Factor ETF (IGEB) a Strong ETF Right Now?
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Launched on 07/11/2017, the iShares Investment Grade Bond Factor ETF (IGEB - Free Report) is a smart beta exchange traded fund offering broad exposure to the Investment Grade Corporate Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $234.86 million, which makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. IGEB seeks to match the performance of the BlackRock Investment Grade Enhanced Bond Index before fees and expenses.
The BlackRock Investment Grade Enhanced Bond Index comprises of U.S. dollar-denominated, investment-grade corporate bonds.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for IGEB are 0.18%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.85%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Hsbc Holdings Plc-3.97%-05-22-2030 accounts for about 0.54% of the fund's total assets, followed by Transcanada Trust-5.30%-03-15-2077 and Targa Resources Partners Lp-4.88%-02-01-2031.
Its top 10 holdings account for approximately 5.24% of IGEB's total assets under management.
Performance and Risk
So far this year, IGEB has lost about -1.34%, and was up about 4.05% in the last one year (as of 10/20/2023). During this past 52-week period, the fund has traded between $41.19 and $45.54.
IGEB has a beta of 0.29 and standard deviation of 7.33% for the trailing three-year period. With about 417 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 $35.87 billion in assets, Vanguard Total International Bond ETF has $50.36 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?
Launched on 07/11/2017, the iShares Investment Grade Bond Factor ETF (IGEB - Free Report) is a smart beta exchange traded fund offering broad exposure to the Investment Grade Corporate Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $234.86 million, which makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. IGEB seeks to match the performance of the BlackRock Investment Grade Enhanced Bond Index before fees and expenses.
The BlackRock Investment Grade Enhanced Bond Index comprises of U.S. dollar-denominated, investment-grade corporate bonds.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for IGEB are 0.18%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.85%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Hsbc Holdings Plc-3.97%-05-22-2030 accounts for about 0.54% of the fund's total assets, followed by Transcanada Trust-5.30%-03-15-2077 and Targa Resources Partners Lp-4.88%-02-01-2031.
Its top 10 holdings account for approximately 5.24% of IGEB's total assets under management.
Performance and Risk
So far this year, IGEB has lost about -1.34%, and was up about 4.05% in the last one year (as of 10/20/2023). During this past 52-week period, the fund has traded between $41.19 and $45.54.
IGEB has a beta of 0.29 and standard deviation of 7.33% for the trailing three-year period. With about 417 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 $35.87 billion in assets, Vanguard Total International Bond ETF has $50.36 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.