iShares Core Total USD Bond Market ETF

IUSB

Market cap $33.5B

The IUSB ETF is highly sensitive to rate changes due to its higher duration. Rising inflation expectations complicate the Fed's policy decisions, making sustained rate less likely than markets think, despite the emerging recessionary pressure consensus in bond markets. Falling oil prices may support a rate cut narrative, but we're cautious, favoring selective equities over duration in the current environment.

Advisors and investors have long turned to active management for fixed income exposure. They are increasingly favoring ETFs to access the markets.

The U.S. ETF industry is about to hit a tremendous milestone. Year to date through November 11, $897 billion has flowed into exchange traded funds, according to FactSet data.

This week's ETF Wrap shines the light on bond-fund performance as investors on Thursday weighed fresh inflation and jobless-claims data.

ETFs across various categories pulled in $7.1 billion in capital last week, with U.S. fixed-income ETFs leading the way.

Fixed income ETFs continue to gain traction globally. As of August 2024, the asset category managed $2.5 trillion in assets, with iShares managing $1 trillion alone.

The iShares Core Total USD Bond Market ETF could be a viable countercyclical investment as the equity-bond market correlation may be breaking. IUSB has low expense ratios and high credit quality, but its significant duration makes it sensitive to medium to long-term rate changes. If inflation concerns subside, the Fed may lower rates to support growth, benefiting fixed income, though the economic decline is likely needed first, which is the basis of breaking correlation.

There are many reasons to celebrate the BlackRock Flexible Income ETF (BINC). The actively managed multisector ETF launched less than 15 months ago.

Barron's Mid-Year 2024 Pro Picks revealed by panelists for potential investment opportunities. Barron's interviews of eleven financial industry Roundtable-pros tapped 48 predictions. Twelve non-ADR foreign stocks and six funds were dropped by YCharts screens, and six selections paid no dividends, leaving 24 in the final pool. The Barron's list tracked by YCharts as of 7/17/24 projected ten top analyst-estimated net gains from WST, ASML, PBR, RUSHA & topped by SLB ranging 19.46%-35.09%.

IUSB tracks the Bloomberg U.S. Universal Index (LC07TRUU) which includes investment-grade and high-yield U.S. dollar-denominated bonds. The fund is overweight Treasuries and Agency MBS bonds (57% of holdings) and has a duration of 5.8 years, making it sensitive to interest rates. The ETF has a low expense ratio (0.06%) and low volatility (annualized volatility of 6.4%).