A strong management team and sound investment process underpin iShares Interest Rt Hdg U.S. Aggt Bd ETF's Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in corporate bonds and A rated bonds compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

iShares Core U.S. Aggregate Bond ETF

iShares Interest Rt Hdg U.S. Aggt Bd ETF earns an Above Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. The most important driver of the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 92% also contributes to the process. Lastly, the process is limited by its parent firm's risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.1 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to track the investment results of the BlackRock Interest Rate Hedged U.S. Aggregate Bond Index designed to mitigate the interest rate risk of a portfolio composed of U.S. dollar-denominated, investment-grade bonds.  The underlying index is designed to minimize the interest rate risk exposure of a portfolio composed of U.S. dollar-denominated, investment-grade bonds. The fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, and in component securities and instruments in the fund’s underlying index. It is non-diversified.  

 This strategy's 12-month yield is 4.6%, which is near its average peer. The portfolio holds assets with a higher average surveyed credit quality of AA, compared with the category average of A, and it holds no non-investment-grade assets, despite the average peers' 1%. Strategies that take on less credit risk can often shoulder more-adverse market conditions. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 0.1-year duration, is expected to gain 0.1% of its net asset value if interest rates drop by 1 percentage point, and vice versa. This makes the fund much less sensitive to interest rate fluctuations than the broader bond market.

Above Average

Process

iShares’s team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are two managers listed on the fund: James Mauro, Karen Uyehara. The team is well equipped, with an average of 13 years of portfolio management experience. Together, they manage a total of 114 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares Interest Rate Hedged US Aggregate Bond ETF

AGRH tracks an index that holds iShares Core US Aggregate Bond ETF (AGG), which targets USD-denominated, investment grade bonds, while mitigating duration risk through swaps.

The iShares Interest Rate Hedged U.S. Aggregate Bond ETF is a brand new offering from iShares. The fund was launched mid June and has only two weeks of trading activity.

AGRH: New Hedged Bond Offering From iShares

iShares Inflation Hedged US Aggregate Bond ETF

iShares Inflation Hedged High Yield Bond ETF

iShares has launched three new fixed income ETFs on the NYSE Arca today: the iShares Inflation Hedged High Yield Bond ETF (NYSE Arca: HYGI), the iShares Interest Rate Hedged U.S. Aggregate Bond ETF (NYSE Arca: AGRH), and the iShares Inflation Hedged U.S. Aggregate Bond ETF (NYSE Arca: AGIH). HYGI seeks to track the investment results [.

News for iShares Interest Rate Hedged US Aggregate Bond ETF ETF (AGRH)