We have qualitatively reviewed this strategy and reaffirmed its Above Average Process and People ratings. IShares 10+ Year Investment Grade Corporate Bond ETF IGLB offers broad exposure to long-term corporate bonds at a reasonable price tag. The following text is from Feb. 27, 2023.


The fund employs representative sampling to track the ICE BofA 10+ Year US Corporate Index, which targets long-term, investment-grade corporate bonds. Eligible bonds must be U.S.-dollar-denominated, have at least 10 years remaining to maturity, and have $250 million in amount outstanding. Selected constituents are weighted by their market value. The resulting portfolio is diversified and reflective of the issuance activities in the long-term corporate bond market.

As of January 2023, the portfolio’s largest sector exposures were to issuers from the utilities, energy, and healthcare sectors. Still, large financial institutions and telecommunications firms were among the fund’s top issuers.

This fund typically invests around half of its assets in bonds rated BBB and around 40% in bonds rated A, whereas its average peer only parks 50% or 60% of assets in these buckets combined. The fund is not in a corporate-bond-only Morningstar Category, so its peers can and often do hold noncorporate sectors such as Treasuries or municipal bonds. As these sectors tend to have higher credit ratings than corporate bonds, category peers often look more conservative than this fund.

Underweighting bonds rated AAA relative to category peers can make this fund more vulnerable to credit shocks. During the trough of the pandemic-driven downturn in 2020, for instance, the fund fell 6.64 percentage points more than the category average. But it rallied back with the market by outpacing its average peer over the rest of the year, as it benefited from tightening credit spreads.

As of January 2023, this fund’s average duration stood at 12.9 years, falling in the middle quintile of its category. While rising interest rates affected the category as a whole in 2022, category peers with shorter duration or a municipal focus substantially outperformed. As a result, the fund still underperformed the category average. Over the long run, the fund’s low fee and broad portfolio provides a competitive edge over other long-term corporate bond offerings.

Analyst Rating

Reasonable exposure to long-term corporate bonds.

Analyst

Lan Anh Tran

We have qualitatively reviewed this strategy and reaffirmed its Above Average Process rating. The following text is from Feb. 27, 2023. 

IShares 10+ Year Investment Grade Corporate Bond ETF provides a broad exposure to long-term corporate bonds. The fund’s sensible construction earns it an Above Average Process rating.

Above Average

Process

We have qualitatively reviewed this strategy and reaffirmed its Above Average People rating. The following text is from Feb. 27, 2023. 

BlackRock boasts a large and experienced team reinforced by sector specialists, support teams, and centralized trading desks, mitigating key-person risk and underpinning an Above Average People rating.

James Mauro and Karen Uyehara have been named as lead portfolio managers on this fund since 2011 and 2021, respectively. Mauro joined BlackRock in 2010 from State Street, while Uyehara joined the same year from Western Asset. Uyehara replaced Scott Radell as a lead portfolio manager in June 2021. The change does not affect the team’s processes nor our confidence in their abilities going forward. 

Portfolio management is a team effort at BlackRock, so the named manager interacts with a wider team of traders and managers around the globe to execute the fund’s day-to-day operations. A separate index analytics team researches and helps prepare for corporate actions and index changes. Most of the portfolio management process is automated as BlackRock’s Aladdin platform fulfills much of the portfolio management tasks. Portfolio managers primarily review and approve trades prior to and after execution, utilizing discretion when there’s opportunity for added value. An independent risk management team supervises index-tracking performance.

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

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