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What Investors Should Know About Bond ETFs

Neena Mishra
·2 min read
  • (1:00) - What Is Driving The Growth Of Bond ETFs?

  • (7:45) - Bond ETFs Price Transparency

  • (11:35) - Actively Managed vs Index Bond ETFs

  • (17:00) - Did The Pandemic Push Investors Toward Fixed Income ETFs?

  • (23:15)  - How Do Bond ETFs Fit Into An Investor's Portfolio?

  • (28:30) - Breaking Down iShares Bond ETFs

  • (35:00) - Episode Roundup: Podcast@Zacks.com


In this episode of ETF Spotlight, I speak with Karen Schenone, Head of iShares Fixed Income Strategy at BlackRock, the world’s largest asset manager. We talk about fixed income ETFs, which are becoming increasingly popular with institutions as well as individual investors.

Global fixed income ETF assets totaled $1.3 trillion at the end of June 2020, and per BlackRock, these assets could grow to $2 trillion by 2024. We discuss the major factors contributing to this growth and the benefits of investing in bond ETFs versus individual bonds. The iShares Core U.S. Aggregate Bond ETF AGG provides exposure to the entire total U.S. investment-grade bond market. It has an expense ratio of just 4 basis points.

Fixed income ETFs have seen huge inflows this year, particularly after the Federal Reserve announced that it would buy ETFs for the first time. Can these trends continue in 2021 as Covid-19 vaccines are likely to become widely available by mid-year?

In the current ultra-low interest rate environment, investors find it challenging to generate safe, stable income. Karen suggests looking at ETFs like the iShares Broad USD High Yield Corporate Bond ETF USHY and the iShares Preferred And Income Securities ETF PFF.

iBonds ETFs make it is easy for investors to implement a bond ladder strategy with only a few ETFs, rather than trading numerous bonds. Tune into the podcast to learn more.

We also discuss how investors can access sustainable strategies through bond ETFs. The iShares ESG Aware U.S. Aggregate Bond ETF EAGG provides exposure to investment grade bonds from issuers with favorable ESG practices.

Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.

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iShares Core U.S. Aggregate Bond ETF (AGG): ETF Research Reports
iShares Preferred and Income Securities ETF (PFF): ETF Research Reports
iShares Broad USD High Yield Corporate Bond ETF (USHY): ETF Research Reports
iShares ESG Aware U.S. Aggregate Bond ETF (EAGG): ETF Research Reports
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Zacks Investment Research