Morningstar - Q2 2024 - 46

Strategies
Global Bond Exposure With a Razor-Thin Fee
IShares Core International Aggregate Bond ETF should
maintain a performance edge.
Lan Anh Tran
BEST IDEAS: PASSIVE
This article is adapted from a Morningstar research report dated March 27, 2024.
IShares Core International Aggregate Bond ETF IAGG delivers a slice of the
global bond market for a razor-thin fee. It tracks the Bloomberg Global
Aggregate ex USD 10% Issuer Capped (Hedged) Index. The index sweeps in
investment-grade bonds denominated in currencies other than US dollars and
weights them by market value, capping issuer weightings at 10%. It also
hedges its currency exposure back to the US dollar monthly.
The fund's top country exposures reflect the size of the global debt markets.
As of February 2024, the fund carried an 18% stake in Chinese bonds
and another 10% in Japanese bonds, followed by developed European markets
such as France and Germany. These allocations are higher than those
of a typical category peer and come at the expense of its allocation to Latin
America. The strength of these markets will continue to be an important
influence on the fund's performance. The Chinese market is still
in the process of opening up to foreign investors, and its bonds are more
difficult to trade.
Sovereign bonds hover between 70% and 80% of assets. The fund's largest
issuer was the Japanese government, at 10.5% in February 2024,
followed by the Chinese government at 9.6%. These securities are relatively
more liquid than corporate bonds, which should help keep trading costs
down. The fund has smaller weightings in corporate bonds and a muted credit
risk profile relative to peers. This has cushioned category-relative performance
when credit spreads widened but is a headwind when investors favor
riskier assets. The fund outpaced the category average by nearly 4 percentage
points during the worst of the coronavirus pandemic shock, but it lost all
of that excess return in the ensuing credit rally of 2020.
The fund's diversified and low-fee portfolio should provide better
protection during credit shocks while maintaining broad exposure to the
opportunity set. In the long run, it should maintain a performance edge
over its category peers. K
Lan Anh Tran is an analyst with Morningstar Research Services LLC.
IShares Core International Aggregate Bond ETF IAGG
Stats 03/31/2024
Morningstar Medalist Rating
´
Total Assets
$5.79 Billion
Process
Above Average
Growth of 10K 03/31/2024
$11K
10
9
8
04/2021
Limited
Interest-Rate Sensitivity
04/2022
Morningstar Style Box 03/31/2024
Moderate Extensive
04/2023
Morningstar Ratings 03/31/2024
Snapshot as
of most recent
portfolio.
Period
3-Yr
5-Yr
Mstar
Return
Mstar
Risk
Mstar
Rating
Above Avg Below Avg QQQQ
Average Below Avg QQQQ
10-Yr - - -
Overall Rating
Top 5 Sectors 03/31/2024
Government
Corporate
Securitized
Cash & Equivalents
Derivatives
■ Fund ❙ Category Average
12.62
42.72
10.80
3.53 5.36
1.05
0.42
0%
46
Morningstar Q2 2024
18.98
22.09
25
50
75
100
82.38
QQQQ
iShares Core
International
Aggregate Bond ETF
$9,761
Morningstar Global
ex-US Core Bond
Hdg USD
$9,582
Morningstar Category
Global Bond-USD Hedged
5-Yr Annlzd Return
0.91%
Morningstar Pillars 03/31/2024
People
Above Average
Parent
Above Average
Expense Ratio
0.07%
5-Yr % `rank` in Cat
38
Low
Credit Quality
Medium High
https://www.morningstar.com/etfs/bats/iagg/quote https://www.morningstar.com/people/lan-anh-tran
Morningstar - Q2 2024

Table of Contents for the Digital Edition of Morningstar - Q2 2024
