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Is iShares Investment Grade Bond Factor ETF (IGEB) a Strong ETF Right Now?
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The iShares Investment Grade Bond Factor ETF (IGEB - Free Report) made its debut on 07/11/2017, and is a smart beta exchange traded fund that provides 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $385.01 million, making it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. IGEB, before fees and expenses, 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.18% for this ETF, which makes it on par with most peer products in the space.
IGEB's 12-month trailing dividend yield is 4.62%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Hsbc Holdings Plc-3.97%-05-22-2030 accounts for about 0.54% of 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
Year-to-date, the iShares Investment Grade Bond Factor ETF has added roughly 8.82% so far, and was up about 7.44% over the last 12 months (as of 12/22/2023). IGEB has traded between $41.19 and $45.54 in this past 52-week period.
IGEB has a beta of 0.31 and standard deviation of 7.55% 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 $35.74 billion in assets, Vanguard Total International Bond ETF has $54.53 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?
The iShares Investment Grade Bond Factor ETF (IGEB - Free Report) made its debut on 07/11/2017, and is a smart beta exchange traded fund that provides 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $385.01 million, making it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. IGEB, before fees and expenses, 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.18% for this ETF, which makes it on par with most peer products in the space.
IGEB's 12-month trailing dividend yield is 4.62%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Hsbc Holdings Plc-3.97%-05-22-2030 accounts for about 0.54% of 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
Year-to-date, the iShares Investment Grade Bond Factor ETF has added roughly 8.82% so far, and was up about 7.44% over the last 12 months (as of 12/22/2023). IGEB has traded between $41.19 and $45.54 in this past 52-week period.
IGEB has a beta of 0.31 and standard deviation of 7.55% 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 $35.74 billion in assets, Vanguard Total International Bond ETF has $54.53 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.