On Friday, BlackRock expanded its extensive roster of fixed income ETFs with the launch of four new funds. These fixed income funds all use a laddered strategy comprising assets with maturities lower than six years.
Focusing on TIPS
The iShares iBonds 1-5 Year TIPS Ladder ETF (LDRI ) focuses on inflation-adjusted U.S. Treasury Bonds (TIPS). The fund has a net expense ratio of 0.10%.
Investing in a laddered TIPS portfolio can make a great deal of sense right now. Investors concerned about a resurgence in inflation could cash in on LDRI’s results.
Advantages of Corporate Bonds
Alternatively, investors may wish to consider focusing on corporate bonds with the iShares iBonds 1-5 Year Corporate Ladder ETF (LDRC ). Like LDRI, LDRC offers a net expense ratio of 10 basis points.
Corporate bonds are becoming an increasingly attractive investment option in a lower-rate environment. Given that the Federal Reserve just trimmed rates again yesterday, now may be a good time to add more corporate bond exposure.
Chasing Yield
For those seeking strong returns, the iShares iBonds 1-5 Year High Yield and Income Ladder ETF (LDRH ) might do the trick. This fund operates with a net expense ratio of 0.35%.
As the fund’s title suggests, LDRH offers a laddered portfolio of high yield corporate bonds. While these investments may offer more risk, they can also provide greater reward over the long term.
A Low-Cost Treasury Option
Last but certainly not least is the iShares iBonds 1-5 Year Treasury Ladder ETF (LDRT). It has the lowest net expense ratio of this bunch, currently sitting at 0.07%.
The ETF gives investors access to U.S. Treasury bonds in a short-duration laddered portfolio. This ETF can serve as a low-cost means for investors to build up their exposure to U.S. Treasuries.
“It has been a record year for fixed income ETF flows, as advisors and investors see the liquidity and efficiency benefits,” said Todd Rosenbluth, head of research at VettaFi. “It’s great to see iShares expand as they are the asset class industry leader.”
With hundreds of ETFs available in the United States, BlackRock remains a leading issuer of proven fund strategies. One of the largest iShares fixed income ETFs, the iShares Core U.S. Aggregate Bond ETF (AGG ), has over $119 billion in assets under management.
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