ISTB Profile
The iShares Core 1-5 Year USD Bond ETF aims to provide investors with broad exposure to short-term U.S. dollar-denominated investment-grade bonds. The fund seeks to achieve this objective by investing at least 80% of its assets in the securities that are part of its underlying index. This index includes a diverse range of fixed-income securities, reflecting the short-term segment of the bond market.
The fund's investment strategy involves holding TBA (to-be-announced) transactions, which are derivative instruments used to buy or sell mortgage-backed securities at a future date. These transactions are designed to have economic characteristics closely aligned with those of the index's component securities. By doing so, the ETF maintains its focus on short-term investment-grade bonds while ensuring liquidity and flexibility in managing its portfolio.
In addition to its core strategy, the ETF commits at least 90% of its assets to fixed-income securities that fall within the index’s parameters. This includes a variety of U.S. Treasury securities and high-quality corporate bonds, which are selected based on their creditworthiness and short maturity periods. The emphasis on short-term bonds helps mitigate interest rate risk and provides stability in a changing market environment.
The fund is designed for investors seeking to preserve capital while earning income through investment-grade bonds with shorter durations. By focusing on securities with maturities of one to five years, the ETF aims to offer lower volatility and reduced sensitivity to interest rate fluctuations compared to longer-duration bonds. This approach aligns with the needs of conservative investors who prioritize stability and moderate returns.
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