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iBonds ETFs Explained & Where to Buy in 2024

Mariana Vilaça| Updated: January 15, 2024

iBonds ETFs, introduced by iShares from BlackRock in the US in 2010 and later in Europe in August 2023, offer a unique suite of bond ETFs with fixed maturity dates. These ETFs hold a diversified portfolio of bonds sharing similar maturity dates. 

Are you interested in exploring the advantages of iBonds ETFs? Do you want to understand how iBonds ETFs work and the differences between iBonds, individual bonds and traditional bond ETFs? Keep reading!

What is an iBonds ETF?

iBonds ETF is an ETF that holds a diversified portfolio of bonds with similar maturity dates. 

They are essentially a basket of bonds from different places, all chosen to be paid back around the same time. When time gets up (maturity date), you get your money back. You’ll also receive the interest at the maturity date (accumulative ETF) or as time goes on (distributive ETF).

They are designed to “mature like a bond, trade like a stock and diversify like a fund”.

Source: iShares

Introduced by iShares from BlackRock, they have been available in the US since 2010 but failed to gain much prominence in the low-interest rate decade preceding the COVID-19 pandemic. In August 2023, iBonds ETFs were made available in Europe. These ETFs provide a diversified basket of bonds within a desired sub-asset class, all sharing a similar maturity date. At maturity, they distribute a final payout.

What sets iBonds ETFs from traditional bonds ETFs is that the first ones provide a fixed maturity date, whereas, in traditional bonds ETFs, there is no expiration date, meaning that new bonds are added (as others mature), which gives a continuous, rolling exposure to bond markets

However, BlackRock is not the only one in this business since Invesco also offers a similar product called BulletShares. While they offer a comparable investment option to iBonds ETFs, we’ll delve deeper into the analysis of iBonds ETFs. This focus is because iShares provide the most significant and impactful investment options.

Since 2010, when iShares introduced the iBonds ETF in the US, a total of 30 iBonds ETFs have been launched, offering an investment experience closely resembling that of holding a diversified portfolio of individual bonds. These iBonds ETFs span a spectrum of risk levels, with the more conservative options including US Treasuries and the risk profile increasing as we move to the next tier. The highest level of aggressiveness is represented by the High Yield & Income Corporate category.

There are five distinct asset classes within iBonds ETFs:

  • US Treasuries, 
  • US TIPS (Treasury Inflation-Protected Securities), 
  • Municipals, 
  • Investment-grade bonds, 
  • High-yield bonds. 

This diverse range allows you to tailor your portfolio strategy based on your risk tolerance and investment goals. In Europe, the corporate iBonds ETFs dominate.

Also, it is important to know that iBonds ETFs can be distributive or accumulative. An accumulative iBond ETF will keep and reinvest dividends until the ETF maturity date. When this time comes, after all the bonds in the portfolio mature, the ETF is closed, and shareholders receive a final distribution equivalent to the fund NAV. On the other hand, a distributive iBonds ETF will distribute the dividends to the shareholders with a determined frequency that can be checked in the iBonds ETF Factsheet.

Estimate the Yield of your iBonds ETF Investment

When you are ready to purchase an iBond ETF, there is a tool provided by iShares that allows you to understand the estimated net acquisition yield of the fund. If the fund is held to maturity, the estimated net acquisition yield provides a yield estimate, net of fees and market price impact.

On each iBonds ETF product page, a tool called the Estimated Net Acquisition Yield Calculator, can provide a yield estimate if you enter a projected market price.

There is an illustrative example of what you can do with this tool:

Source: iShares

Understanding Fixed Maturity and Yield to Maturity

Like individual bonds, iBonds ETFs also have a fixed maturity date, ensuring that investors can anticipate a final repayment upon maturity, along with regular income (in case it is a distributing iBond ETF). As mentioned, iBonds ETFs track an underlying index, offering exposure to hundreds of bonds across different sectors and countries with similar maturity dates. Consequently, iBonds’ ETFs come in a variety of maturities, allowing you to select the duration for which you want to invest your money.

iBonds ETFs are meticulously crafted to offer a yield-to-maturity (“YTM”) profile that mirrors the underlying bond portfolio. These funds are structured to maintain your expected yield-to-maturity by employing a blend of monthly and conclusive end-date distribution. The distribution of proceeds is anticipated once all the underlying bonds have matured, but you might know that throughout the maturity of each bond inside the iBonds ETF, the cash will be kept as “cash and cash equivalents” in money market funds or directly in short-term government securities.

Source: iShares

When is the maturity date of iBonds ETFs?

iBonds ETFs usually mature in October or December of the respective fund year, aligning with the fund’s nomenclature (the year  it matures is in the iBond ETF name).

During the concluding months, as the bonds within the portfolio reach maturity, the fund strategically shifts its holdings to liquid assets like cash and cash equivalents.

Following the maturation of all portfolio bonds, the ETF undergoes closure, and shareholders are entitled to a final distribution equivalent to the fund NAV. If you have already invested in an individual bond, you are already  familiar with it because the experience is similar to the principal repayment of an individual bond at maturity.

Source: iShares

What are the benefits of iBonds ETF?

1. Easy access to the bond market

Traditionally, trading bonds has been challenging for beginner investors due to their absence from exchange listings. However, iBonds ETFs can offer a solution for your problems because they revolutionise this process, providing effortless access to a diversified basket of bonds.

2. Diversification

iBonds strategically track an underlying index, offering broad exposure to hundreds of bonds spanning diverse sectors and countries. This unique feature enhances the investment potential and diversification for investors seeking comprehensive bond market exposure.

3. Fixed Maturity Date

iBonds ETFs offer the flexibility to choose your preferred time horizon. These ETFs are available in a versatile range of maturities, allowing you to customise the duration of your investment to align precisely with your financial goals.

4. Less Price Risk

If you plan to keep the iBond ETF until maturity, the daily price movements do not matter to you. Besides, as time gets near the maturity date, the duration will also decrease, lowering its sensitivity to interest rate changes.

How does it compare to other investment options?

As mentioned earlier, iBonds ETFs hold a diversified basket of bonds traded on an exchange, just like traditional bond ETFs. However, it offers the added advantage of individual bonds with a fixed maturity date, providing reduced exposure to interest rate risk as the maturity date approaches.

Source: iShares

Top 10 iBonds ETF by AUMs

For US investors

iBond ETF Ticker AUMs (Millions USD) As of
iShares® iBonds® Dec 2024 Term Treasury ETF IBTE 2,700+ Jan. 4, 2024
iShares® iBonds® Dec 2025 Term Treasury ETF IBDP 2,700+ Jan. 5, 2024
iShares® iBonds® Dec 2028 Term Corporate ETF IBDQ 2,400+ Jan. 4, 2024
iShares® iBonds® Dec 2029 Term Corporate ETF IBDR 2,100+ Jan. 4, 2024
iShares® iBonds® Dec 2027 Term Corporate ETF IBDS 1,900+ Jan. 4, 2024
iShares® iBonds® Dec 2025 Term Treasury ETF IBTF 1,800+ Jan. 5, 2024
iShares® iBonds® Dec 2028 Term Corporate ETF IBDT 1,400+ Jan. 4, 2024
iShares® iBonds® Dec 2029 Term Corporate ETF IBDU 900+ Jan. 5, 2024
iShares® iBonds® Dec 2026 Term Treasury ETF IBTG 700+ Jan. 4, 2024
iShares® iBonds® Dec 2030 Term Corporate ETF IBDV 600+ Jan. 5, 2024

Source: iShares

Please find the full list of US iBonds ETFs here.

For European investors

iBond ETF Ticker AUMs (Millions EUR) As of
iShares iBonds Dec 2028 Term EUR Corporate UCITS ETF EUR (Dist) IB28 400+ Aug. 9, 2023
iShares iBonds Dec 2026 Term EUR Corporate UCITS ETF EUR (Dist) IB26 200+ Aug. 9, 2023
iShares iBonds Dec 2026 Term EUR Corporate UCITS ETF EUR (Acc) CEBE 180+ Set. 5, 2023
iShares iBonds Dec 2027 Term EUR Corporate UCITS ETF EUR (Acc) IB27 150+ Set. 6, 2023
iShares iBonds Dec 2025 Term EUR Corporate UCITS ETF EUR (Acc) IB25 140+ Set. 6, 2023
iShares iBonds Dec 2025 Term USD Corporate UCITS ETF USD (Acc) CEBF* 130+ Set. 6, 2023
iShares iBonds Dec 2028 Term EUR Corporate UCITS ETF EUR (Acc) IVOA 120+ Set. 5, 2023
iShares iBonds Dec 2028 Term USD Corporate UCITS ETF USD (Acc) CBU5* 90+ Aug. 10, 2023
iShares iBonds Dec 2028 Term USD Corporate UCITS ETF USD (Dist) CBU4* 80+ Aug. 9, 2023
iShares iBonds Dec 2026 Term USD Corporate UCITS ETF USD (Acc) D26A* 65+ Aug. 10, 2023

Disclaimer: The tickers follow the Borsa Italiana, all that are select by * refer to gettex

Source: JustETF

Please find the full list of European iBonds ETFs here.

Where to buy an iBonds ETF?

To invest in iBonds ETFs, you must find a broker offering them. Below, we present some options for you to consider. All are supervised by top-tier regulators, present low trading commissions, provide good customer support and offer valuable support tools for your investments.

iBonds ETFs Explained & Where to Buy in 2024 6

1# Best broker for social trading

Min. deposit of $10
$0 for stocks and ETFs (other fees apply)
Offers iBonds ETF in USD (through CFDs) and EUR
View BrokeriBonds ETFs Explained & Where to Buy in 2024 7Read review
eToro Summary
The leading social trading platform with 30M+ users worldwide. Copy other traders/investors, invest in one of the pre-built portfolios, or trade for yourself
RegulatorsFCA, CySEC, ASICProducts offeredStocks, ETFs, Cryptos, and CFDs on Stocks, ETFs, Commodities, Forex, Indices, and Cryptocurrencies
Interest on uninvested cashUp to 5.3% in USDFractional SharesYes
Supported countriesWorldwideDemo accountYes

76% of retail CFD accounts lose money.

Source: eToro

iBonds ETFs Explained & Where to Buy in 2024 9

2# Best broker for beginners

Free share bonus with code ``IITW``
Commission-free investing
Offers iBonds ETF domiciled in US and Europe
View BrokeriBonds ETFs Explained & Where to Buy in 2024 7Read review
Trading212 Summary
Trading 212 is an online broker that lets you trade stocks, ETFs, and CFDs. It offers commission-free trading and a robo-advisor feature
RegulatorsFCA, CySEC and FSCProducts offeredReal Stocks, ETFs, Forex, CFDs on stocks, crypto, indices and ETFs. Fractional shares, automatic investment system
Interest on uninvested cashEUR: 4.00%; USD: 5.00%; GBP: 4.50% (starting January 11th)Fractional SharesYes
Supported countriesWorldwide (exceptions apply - not available in the USA, Canada, and China)Minimum deposit€/£10

Investing involves risk of loss.

Source: Trading 212

Saxo-logo

3# Best broker for advanced traders

Min. deposit of €/$0
Excellent reputation
Offers iBonds ETF domiciled Europe
View BrokeriBonds ETFs Explained & Where to Buy in 2024 7Read review
Saxo Bank Summary
Saxo Bank is an investment bank specialising in online trading and investment. It is a global and leading online broker, offering access to most asset classes worldwide, as well as more innovative products like managed investment portfolios and trading strategies from professional traders
RegulatorsASIC, FSA, FCA, SFC, MAS, FINMA, DFSAProducts offeredStocks, ETFs, Bonds, Mutual Funds, Crypto ETPs, Options, Futures, Forex, Forex Options, Crypto FX, CFDs and Commodities
Interest on uninvested cashUSD: Up to 4.059%; EUR: Up to 2.65%; GBP: Up to 3.93% (varies between countries)Fractional SharesNo
Supported countriesWorldwide (exceptions apply - not available in the USA)Demo accountYes

62% of retail CFD accounts lose money.

Source: Saxo Bank

iBonds ETFs Explained & Where to Buy in 2024 14

4# Best broker for US investors

Min. deposit of €/$0
Excellent reputation (founded in 1978)
Only offers US iBonds ETF
View BrokeriBonds ETFs Explained & Where to Buy in 2024 7Read review
Interactive Brokers Summary
IBKR is a leading global online broker that provides an advanced trading platform, a large selection of tradable securities, and low fees. It also launched IBKR GlobalTrader
RegulatorsFINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS and MNBProducts offeredStocks, ETFs, Options, Futures, Forex, Commodities, Bonds and Funds
Interest on uninvested cashEUR: 3.467%; USD: 4.83%; GBP: 4.75% (as of January 2024)Fractional SharesYes
Supported countriesWorldwide (exceptions apply)

The Bottom Line

With the launch of iBonds ETFs, the benefits of traditional bond ETFs, diversification, and easy exposure to risk are combined with the added advantage of individual bonds having maturity dates. This allows you to choose the ETF to invest in based on your most convenient time horizon.

This instrument was introduced by iShares in 2010, gaining more prominence after the COVID-19 pandemic due to low-interest rates. It only reached Europe in mid-2023, being the only two regions where you can find them available. If you want to know which iBonds ETFs are available in each region, we present in the section “Top 10 iBonds ETF by AUMs”.

At the end of this article, we provided some suggestions on where you can find these instruments and invest in them. If you are European, pay particular attention because the last option, Interactive Brokers, does not offer iBonds ETFs domiciled in Europe. However, take advantage of the three remaining options: eToro, Trading 212, and Saxo Bank.

Mariana Vilaça
Fintech Analyst

Mariana is currently a finalist in Management program at the University of Minho, and she also serves as a digital ambassador for a leading Big4 company in the field of financial consulting, Ernst & Young.

Mariana's primary areas of interest revolve around the exact sciences, numbers, and the financial sector. Presently, Mariana holds the position of COO at a junior initiative within her university, dedicated to promoting financial literacy among the youth and addressing the educational challenges faced in Portugal.

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