iShares Intermediate Credit Bond ETF

Risk Classification: 2 – Conservative

Price per Unit (28 Mar 16): 109.04 [USD]

Dividend Yield: 2.49%

Expense Ratio: 0.20%

Please refer prospectus for detailed risk disclosure

Investment Rationale:

This ETF broadly tracks the US intermediate-term investment grade credit market. Investment grade credit spreads have widened over the past 1 year due to deteriorating credit quality on American balance sheets as well as heavy supply of bonds as managements have taken more shareholder friendly approach in boosting dividends and share buy-backs. However, we feel the market is having good value as we don’t expect the market to capitulate barring a systemic risk event. At the same time, we don’t expect a sharp sell-off in medium term US treasuries due to our overall bearish outlook and high yield differential with other G3 sovereign markets.

Below Chart Shows the US Investment Grade CDS [spread] Index:

us ig chart

Fundamental Risk to investment:

This ETF will sharply sell off in the event of a sharp widening in credit spreads and/or a sharp sell-off in US Treasuries. Neither are base case expectations.

Details of ETF:

Details on iShares website – For Live data and Prospectus

CIU US DESCIU US COMP