A strong management team and sound investment process underpin iShares iBonds 2024 Term HY and Inc ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable underweight position in B rated bonds and debt with seven- to 10-year maturities 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 iBonds 2024 Term HY and Inc 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 index 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, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's five-year risk-adjusted success ratio of 55% also supports the process. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their noteworthy success ratio suggests that the firm does well for investors and that this fund may benefit from that. 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 Bloomberg 2024 Term High Yield and Income Index.  The fund will invest at least 80% of its assets in the component instruments of the underlying index, and the fund will invest at least 90% of its assets in fixed income securities of the types included in the underlying index. The underlying index is composed of U.S. dollar-denominated, taxable, fixed-rate, high yield and BBB or equivalently rated corporate bonds scheduled to mature between January 1, 2024 and December 15, 2024, and inclusive.  

 This strategy's 12-month yield is 6.8%, higher than its average peer's 6.3%. Plus, its 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return) sits at 6.3%. While a higher yield may deliver more income, it also tends to indicate 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 has a higher average surveyed credit quality of BB, compared with the typical peers' B. Lower-credit-risk strategies are often able to navigate bear markets more effectively. 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 0.5-year duration, is expected to gain 0.5% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Above Average

Process

iShares iBonds 2024 Term HY and Inc ETF's strong team drives the strategy's Above Average People Pillar rating. There are two managers listed on the fund: Karen Uyehara, James Mauro. The team is well equipped, with an average of 14 years of portfolio management experience. Together, they manage a total of 114 strategies, with solid long-term prospects. The strategies average a Silver asset-weighted Morningstar Medalist Rating, indicating a position 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 iBonds 2024 Term High Yield and Income ETF

IBHD tracks a market-value-weighted index of USD-denominated, high yield and BBB-rated corporate bonds maturing in 2024. The fund will terminate in December 2024.

iShares iBonds 2024 Term High Yield and Income ETF invests in high yield corporate bonds and seeks to track the Bloomberg 2024 Term High Yield and Income Index. Here I review the IBHD ETF in terms of holdings and distribution history.  Under Portfolio strategy, I compare owning the ETF to a 1-Yr CD. For the title play and for investors looking to start a bond ladder, I give the IBHD ETF a Buy rating.  Other ETFs in the series are mentioned for ladder-builders.

IBHD: Skip The 1-Yr CD, Own This Term ETF Instead

iShares iBonds 2024 Term High Yield and Income ETF is a corporate bond fund with a yield to maturity of 7.8%. The fund is overweight in the consumer cyclical sector, and 95% of its assets are in bonds rated BB and below. IBHD is not a long-term investment and is designed as a component for bond ladder strategies, making it more suitable for high-net-worth individuals and family offices.

IBHD: A Junk Bond Ladder Rung

Junk bonds are risky at this stage of the economic cycle. Smaller company bankruptcy filings are accelerating but publicly-traded high yield credit has stayed buoyant. IBHD gives you the right mix to reach for an 8% yield.

IBHD:A Good Place For 8% Yield

2021 gave you the worst of all worlds, where you got paid nothing for taking credit risk and duration risk. 2023 is paying you to take some credit risk but not so much on the duration front.

IBHD: 8% Yielding ETF With Lowest Duration Risk

iShares iBonds 2024 Term High Yield and Income ETF is a term fund that liquidates by December 15, 2024. The average YTM is ~8.5% and the maturity of the holdings is double-B or single-B rated, which should mitigate refinancing risk.

News for iShares iBonds 2024 Term High Yield and Income ETF ETF (IBHD)