AGRH Profile
iShares Interest Rate Hedged U.S. Aggregate Bond ETF is an exchange-traded fund (ETF) specifically designed to mitigate the interest rate risk associated with a portfolio of U.S. dollar-denominated, investment-grade bonds. The fund offers investors a way to maintain exposure to high-quality bonds while minimizing the negative impact of rising interest rates. This is achieved by tracking an underlying index that strategically hedges against interest rate movements, allowing the fund to provide a more stable return profile in volatile rate environments.
To meet its investment objective, the iShares Interest Rate Hedged U.S. Aggregate Bond ETF invests at least 80% of its net assets, including any borrowings for investment purposes, in the component securities and instruments that make up the underlying index. This index includes a broad array of U.S. investment-grade bonds, such as Treasury securities, corporate bonds, and mortgage-backed securities. The fund replicates this index while incorporating interest rate hedging strategies, enabling it to preserve the value of the bond portfolio even when interest rates rise, which typically causes bond prices to fall.
The ETFs interest rate hedging strategy is implemented through the use of derivatives, including interest rate swaps and Treasury futures. These instruments are employed to offset the interest rate exposure inherent in the bond portfolio, effectively neutralizing the impact of rate fluctuations. As a non-diversified fund, iShares Interest Rate Hedged U.S. Aggregate Bond ETF may concentrate its holdings, focusing more intensely on specific areas of the bond market that align with its hedging strategy. This targeted approach enhances its ability to achieve its objective but also introduces specific risks associated with concentration.
Managed by BlackRock, Inc., a global leader in asset management, the iShares Interest Rate Hedged U.S. Aggregate Bond ETF benefits from the firms deep expertise in both fixed income and derivative markets. BlackRocks management team utilizes a rigorous, research-driven approach to constructing the portfolio and implementing the interest rate hedge, ensuring that the fund is well-positioned to navigate different interest rate environments. This ETF is an essential tool for investors seeking to maintain bond market exposure while protecting their portfolios from the adverse effects of rising interest rates, making it a valuable component in a diversified investment strategy.
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