A sound investment process and strong management team underpin iShares 0-5 Year TIPS Bond ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in corporate bonds and AA rated bonds compared with category peers. The fixed-income team managing the passive product drives the strategy's Above Average People Pillar rating. The strategy is part of a first-rate parent that has overall reasonable fees and a high success ratio across its product shelf. These attributes support its Above Average Parent Pillar rating.

Analyst Rating

iShares 0-5 Year TIPS Bond ETF earns a High 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 leading factor in 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. Strong risk-adjusted performance also reinforces the process, as shown by the fund's five-year alpha calculated relative to the category index, which suggests the process was successful over that period.

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

The investment seeks to track the investment results of the ICE U.S. Treasury 0-5 Year Inflation Linked Bond Index.  The index measures the performance of the inflation-protected public obligations of the U.S. Treasury, commonly known as "TIPS, " that have a remaining maturity of less than or equal to five years. The fund will invest at least 80% of its assets in the component securities of the underlying index, and and the fund will invest at least 90% of its assets in U.S. Treasury securities that BFA believes will help the fund track the underlying index.  

 This strategy has a modest 4.1% 12-month yield, lower than its average peers' 5.0%. In addition, it has a 5.8% 30-day SEC yield (a measure similar to yield-to-maturity). A lower yield tends to indicate lower credit risk. The portfolio holds assets with a higher average surveyed credit quality of AAA, compared with the typical peers' A, and it holds no non-investment-grade assets, despite the average peers' 2%. Lower-credit-risk strategies are often able to navigate bear markets more effectively. In terms of interest-rate risk, compared with others in the Inflation-Protected Bond category, this fund maintains a significantly lower average effective duration of 2.6 years compared to the category's 5.9 years. The shorter a strategy's duration, the less sensitive it is to shifts in interest rates. This fund, with a 2.6-year duration, is expected to gain 2.6% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

High

Process

iShares 0-5 Year TIPS Bond ETF benefits considerably from its fixed income team, earning it an Above Average People Pillar rating. There are two managers listed on the fund: James Mauro, Karen Uyehara. Experience on the team is abundant, with 12 years of average portfolio management experience. Together, they manage a total of 107 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.

Above Average

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 0-5 Year TIPS Bond ETF

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News for iShares 0-5 Year TIPS Bond ETF ETF (STIP)