We have qualitatively reviewed this strategy and reaffirmed its Above Average People and Above Average Process Ratings. IShares Broad USD Investment Grade Corporate Bond ETF boasts a well-diversified, market-value-weighted portfolio and a rock-bottom fee. It’s a solid option for US investment-grade corporate bonds. The following text is from Feb. 15, 2023.

The fund tracks the ICE BofA US Corporate Index, a collection of US investment-grade corporate bonds with at least one year left until maturity. Index constituents are weighted by market value, and the fund holds most of the bonds represented in its benchmark. Consequently, the portfolio accurately represents the composition of the US investment-grade corporate market.

Entering February 2023, 90% of the fund's portfolio carried an A or BBB credit rating, reflecting the credit profile of the investment-grade corporate bond market. While the strategy is vulnerable to drawdowns when credit spreads widen, it should hold up better than Morningstar Category peers that delve into riskier corners of the market. For example, the average category peer holds more than 6% of its portfolio in junk-rated debt, which this fund omits.

The largest corporate debt issuers tend to be in the financials industry, and the strategy tilts toward the sector accordingly. As of January 2023, issuers from the financial-services sector represented more than 36% of the portfolio. Concentration risk is effectively mitigated by the fund's broadly diversified portfolio of more than 9,500 bonds. The fund allocates no more than 2% to any bond issuer, and its top 10 holdings account for less than 1% of the portfolio. Risks endemic to any one company will not affect the fund's performance.

Analyst Rating

A solid approach to investment-grade corporate bonds.

Director

Bryan Armour

We have qualitatively reviewed this strategy and reaffirmed its Above Average Process rating. The following text is from Feb. 15, 2023.

This strategy gives investors access to an expansive portfolio of US-dollar-denominated investment-grade corporate bonds at a minimal cost. It weights investments according to market value, which limits turnover and ensures the portfolio closely reflects the investment-grade corporate bond opportunity set, meriting an Above Average Process Pillar rating.

Above Average

Process

We have qualitatively reviewed this strategy and reaffirmed its Above Average People rating. The following text is from Feb. 15, 2023.

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 managers interact 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

iShares Broad USD Investment Grade Corporate Bond ETF

USIG tracks a market-value-weighted index of USD-denominated, investment-grade corporate debt.

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A record amount of money has flooded into the U.S. corporate bond markets this year, as investors rush to lock in the highest yields years ahead of the Fed rate cuts.

Time to Invest in Corporate Bond ETFs

The iShares Broad USD Investment Grade Corporate Bond ETF is an attractive option for investors looking for exposure to high-quality fixed income securities. The USIG ETF offers broad diversification, low costs, and potential for income generation through a wide array of U.S. investment-grade corporate bonds. The fund carries some interest rate and credit risk, but its advantages make it a worthy consideration for many investors.

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LQD is the largest, most well-known investment-grade corporate bond fund in the market. USIG is a smaller fund in the same industry niche. I believe it to be better as well. An explanation as to why follows.

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Plus, iShares lowered expense ratios on two of its ETFs.

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Investors looking for income often turn to investment-grade corporate bonds and broad, cost-effective ETFs are solid avenues for gaining that exposure.

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The Federal Reserve did wonders for the bond market when it decided to purchase corporate bond ETFs and then, later on, individual issues. Moving forward as global economies look to reopen, investors can still get corporate bond exposure via the iShares Broad USD Investment Grade Corporate Bond ETF (USIG).

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Once believed to be a refuge from volatility equity markets, the fixed income space is enduring pain at the hands of pricing dislocations and liquidity concerns.

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Beleaguered investment-grade corporate bond exchange traded funds got a lifeline Monday when the Federal Reserve said it buy $200 billion worth of high-grade corporate debt, helping the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: LQD) to a gain of 7.39% on more than double the daily average.

3 Corporate Bond ETFs For Fed Debt Buying

With investors scrambling to find added yield on fixed-income investments, investment-grade corporate bond ETFs are luring more assets in today’s low-yield environment. A name to consider in that group, particularly for cost-conscious investors, is the iShares Broad USD Investment Grade Corporate Bond ETF (NASDAQ: USIG).

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