A sound investment process and strong management team underpin iShares U.S. Fixed Inc Bal Rsk Sysmc ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in corporate bonds and A rated bonds compared with category peers. The strategy’s management team earns an Above Average People Pillar rating. 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

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. iShares U.S. Fixed Inc Bal Rsk Sysmc ETF earns an Above Average Process Pillar rating.    The leading factor in 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 supports the rating. 

 Compared with other funds in the Intermediate Core-Plus Bond Morningstar Category, this fund has been consistently sensitive to interest-rate changes over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the average strategy in the category, the managers have been significantly overweight corporate debt in recent years. In the latest month, the strategy has relatively overweighted corporate debt compared with its peers as well. Additionally, there's been a notable overallocation to A rated bonds over the past few years. Compared with category peers, the strategy had more exposure to A rated bonds in the most recent month. Finally, during the past few years, the fund leaned meaningfully away from debt with 15- to 20-year maturities. In recent months, the strategy also had less exposure to debt with 15- to 20-year maturities compared to its peers.

 This strategy's 12-month yield is 4.5%, higher than its average peer's 3.9%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 5.3%. Typically, higher yields come at the cost of higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BBB.

Above Average

Process

iShares U.S. Fixed Inc Bal Rsk Sysmc ETF benefits considerably from its team, earning it an Above Average People Pillar rating. There are three managers listed on the fund: James Mauro, Scott Radell, Jeffrey Rosenberg. The team is well equipped, with an average of 11 years of portfolio management experience. Though they do not manage other products together, managers may manage them individually.  

 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 U.S. Fixed Income Balanced Risk Factor ETF

FIBR tracks an index composed of USD-denominated bonds and Treasury futures. The index seeks to equalize exposure to interest rate risk and credit risk.

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iShares 7-10 Year Treasury Bond ETF

iShares 3-7 Year Treasury Bond ETF

First Trust Long Duration Opportunities ETF

ProShares UltraShort 7-10 Year Treasury

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Schwab Intermediate-Term US Treasury ETF

iShares Short Treasury Bond ETF

iShares 1-3 Year Treasury Bond ETF

SPDR Portfolio Long Term Treasury ETF

SPDR Portfolio Short Term Treasury ETF

Proshares Short 20+ Year Treasury

ProShares UltraShort 20+ Year Treasury

ProShares Short 7-10 Year Treasury

iShares 10-20 Year Treasury Bond ETF

iShares 20+ Year Treasury Bond ETF

Direxion Daily 20+ Year Treasury Bull 3X Shares

It generally takes a few years for changes in Federal Reserve rates to fully impact bond fund dividends. Bond funds are still benefitting from prior rate hikes. Perhaps by enough to cancel out any future rate cuts. By my estimations, and under current Fed guidance, most bond funds would only start to see declining dividends in 2025, at the earliest.

Estimating The Impact Of Lower Rates On Bond Fund Dividends

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Global X MSCI China Real Estate ETF

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Global X China Financials ETF

Global X Next Emerging & Frontier ETF

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Although 14 new ETFs debuted in the U.S. this past week, closure announcements came in even stronger, largely due to Global X pruning its lineup. Launches during the week included funds from BondBloxx, WisdomTree, Innovator, JPMorgan, and Range ETFs.

This Week in ETFs: Closures Outnumber New ETFs

Cabana Target Leading Sector Aggressive ETF

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Cabana Target Leading Sector Moderate ETF

iShares North American Tech-Multimedia Networking ETF

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Cabana Target Drawdown 10 ETF

Cabana Target Drawdown 13 ETF

VictoryShares Free Cash Flow ETF

Alpha Blue Capital US Small-Mid Cap Dynamic ETF

VictoryShares Small Cap Free Cash Flow ETF

Texas Capital Texas Small Cap Equity Index ETF

FT Cboe Vest US Equity Moderate Buffer ETF-Decemebr

iShares U.S. Digital Infrastructure and Real Estate ETF

FT Cboe Vest US Equity Buffer & Premium Income ETF - December

The last full week of the year was a busy one, with 18 new ETFs launching. Among the rolled-out funds were offerings from Texas Capital, PlanRock, PGIM, John Hancock, SP Funds, Bancreek, KB Asset Management, ProShares, and WisdomTree.

This Week in ETFs: VictoryShares Adds Small-Cap FCF Fund

JPMorgan BetaBuilders 1-5 Year US Aggregate Bond ETF

SPDR Bloomberg 3-12 Month T-Bill ETF

SPDR Dow Jones Industrial Average ETF

iShares MSCI Japan ETF

ClearShares Ultra-Short Maturity ETF

Invesco 1-30 Laddered Treasury ETF

Invesco QQQ

ProShares Inflation Expectations ETF

iShares 0-3 Month Treasury Bond ETF

The market is showing signs of weakness and lacks sustainable upside momentum. The recent sell-off has broken key moving averages, indicating a potential shift in market sentiment.

Selling Time? Oil, Inflation, Debt Concerns And A T-Bill Portfolio

Barclays Bank iPath US Treasury 5-Year Bear Exchange Traded   Note 2011-12.7.21 Ser -A- Lkd to BC 2Y US Trsry Futs Trgtd Expsre

Barclays Bank iPath US Treasury 2-year Bull Exchange Traded   Notes 2010-13.8.20 Ser -A- Lnk to BC 2Y US Treasury Futures Trg Ex

Barclays Bank iPath US Treasury 2 Yr Bear Exchange Traded

Barclays Bank iPath US Treasury 10 Yr Bull Exchange Traded    Notes 2010-13.8.20 Sr-A Lk Barclays Cap 10Y US Trs Fut Trgt Exp Id

iShares MSCI Europe Financials ETF

Barclays Inverse US Treasury Composite ETN

Direxion Daily 20+ Year Treasury Bear 3X Shares

ProShares UltraPro Short 20+ Year Treasury

Direxion Daily 7-10 Year Treasury Bull 3x Shares

Direxion Daily 7-10 Year Treasury Bear 3x Shares

ProShares Ultra 20+ Year Treasury

ProShares Ultra 7-10 Year Treasury

Vanguard Intermediate-Term Treasury ETF

Vanguard Long-Term Treasury ETF

Vanguard Short-Term Treasury ETF

PIMCO 25+ Year Zero Coupon US Treasury Index ETF

While there is upward pressure on market rates in 2022, it's not coming from higher net supply. In fact, lower net supply can help to richen government bonds. On top of that, we should see flatter curves over the whole of 2022. We also anticipate some upward pressure on USD Libor.

Rates Outlook: Swap Spreads To See Widening Pressure

CSOP FTSE China A50 ETF

iShares Agency Bond ETF

Xtrackers Harvest CSI 300 China A-Shares ETF

Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF

Xtrackers MSCI China A Inclusion Equity ETF

Global X MSCI China Large Cap 50 ETF

Global X China Consumer ETF

Loncar China Biopharma ETF

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VanEck Vectors ChinaAMC SME-ChiNext ETF

iShares MSCI China A ETF

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WisdomTree China ex-State-Owned Enterprises Fund

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iShares MSCI Hong Kong ETF

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Franklin FTSE Hong Kong ETF

Franklin FTSE Taiwan ETF

Franklin Short Duration U.S. Government ETF

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KraneShares Bosera MSCI China A Share ETF

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KraneShares CICC China Leaders 100 Index ETF

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First Trust Low Duration Opportunities ETF

iShares MSCI China ETF

Invesco Golden Dragon China ETF

Rayliant Quantamental China Equity ETF

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WisdomTree Bloomberg US Dollar Bullish Fund

Invesco DB US Dollar Index Bullish Fund

The deficit spending that supported the economy in 2020 is showing up in hot inflation numbers in 2021. While I think the inflation numbers will get better in 2022, I do not believe they will get back to pre-pandemic levels because of owners' equivalent rents and wage gains in the CPI.

Mind The Bond Market

PIMCO 15+ Year US TIPS ETF

Invesco PureBeta 0-5 Yr US TIPS ETF

Schwab US TIPS ETF

SPDR Portfolio TIPS ETF

iShares 0-5 Year TIPS Bond ETF

PIMCO 1-5 Year US TIPS ETF

FlexShares iBoxx 5 Year Target Duration TIPS Index Fund

FlexShares iBoxx 3 Year Target Duration TIPS Index Fund

iShares TIPS Bond ETF

SPDR Bloomberg 1-10 Year TIPS ETF

PIMCO Broad US TIPS Index ETF

Vanguard Short-Term Inflation-Protected Securities ETF

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Tapering Impact On Treasury Supply

Inflation expectation is a key metric the Fed watches closely. Housing costs - based on different measures of rents - account for one-third of CPI.

Inflation Expectations Come Unanchored

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European Equity Fund

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iShares Europe ETF

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ProShares Ultra FTSE Europe

Vanguard FTSE Europe ETF

Higher rates are ongoing, but we wouldn't blame it on the, very moderate in our view, central bank tone. Improving economic data after the Covid 19-induced soft patch is a more credible, and durable, driver for higher rates.

Rates Spark: The Long Way Up

The commercial banking system now maintains the largest amount of reserve balances it has ever held, thanks to the effort of the Federal Reserve System. Because of this liquidity in the banks, short-term interest rates are threatening to fall into negative territory and have not because the Fed sold $1.2 trillion in reverse repurchase agreements.

Federal Reserve Watch: Fed Keeps Reserves Into Commercial Banks

I don't often write articles on the general economy or macro. However, for the past five weeks, I've gotten requests and messages to talk about what numbers and trends indicate. Given that I'm a EU investor with a diversified portfolio, I'll look at the global situation, with a focus on the larger economic blocs.

Volatility Despite Good EU Numbers - This Is How I Invest

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Invesco Treasury Collateral ETF

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News for iShares U.S. Fixed Income Balanced Risk Factor ETF ETF (FIBR)