IGIB
iShares 5-10 Year Investment Grade Corporate Bond ETF
Published by Radif Partners · Updated
Overview
iShares 5-10 Year Investment Grade Corporate Bond ETF (IGIB) tracks the ICE BofA 5-10 Year US Corporate index and holds its constituents directly, a physical replication managed by iShares. Dividends are paid out to holders rather than reinvested, so IGIB suits investors seeking regular income. The fund is domiciled in US, which determines the withholding tax treatment applied to its dividends. Annual charges come to 0.06% of assets, and the fund holds 18.6B under management. Over five years the fund returned -3.1% a year on average, against 2.3% over three years. It is not eligible for the French PEA, but can be held in a securities account, a UK ISA or a German Depot. Its risk level is rated medium. Launched on 2007-01-05, the fund is denominated in USD and has 19 years of track record. Because IGIB distributes, every payment is taxable in the year it is received, against the dividend allowance in a general account, while it stays sheltered inside an ISA or a SIPP. Domicile in US sets the withholding the fund itself suffers on the dividends it receives, a cost absent from the stated fee but present in the return.
Ongoing charges of 0.06% place this fund 24th of 79 comparable funds, whose median is 0.10%. On £10,000 that costs about 6 a year and 60 over ten years at a constant amount, deducted daily and never visible on a statement: it shows up in the gap between the fund's return and its index's. At this level, neither low enough to be an argument nor high enough to be an obstacle, the decision rests elsewhere: on the index tracked, on the distribution policy, and on what your broker charges to buy.
Replication is physical: the fund actually holds the constituents of ICE BofA 5-10 Year US Corporate, which makes its contents verifiable line by line in the issuer's report. Two points deserve attention. Securities lending first, practised by most physical funds to reduce costs: it earns a few hundredths of a point and creates an exposure to the borrower, covered by collateral, with the annual report stating the proportion lent. Rebalancing second: every change in the index's composition forces the fund to buy and sell, and those internal costs are not in the 0.06% headline. That is why two funds at the same price do not track their index with the same fidelity.
The fund is domiciled in the United States, and for a European investor that is the point to settle before any other. A US fund is outside UCITS regulation: most European brokers cannot offer it to a retail client for want of a key information document, so access depends on the investor's status. Two tax consequences follow as well: dividends paid to a non-resident bear US withholding, reduced by treaty where a W-8BEN is in place, and US securities held directly fall within US estate tax above a threshold that is low for a non-resident. An Irish-domiciled equivalent avoids both questions.
Income is distributed: the fund pays out the dividends it receives, usually one to four times a year. For a holder living off the portfolio that is what is wanted, since the income arrives without selling. For someone still accumulating it is a tax disadvantage in a taxable account: each payment is taxed in the year received, so the amount reinvested is reduced before it starts working again. Reinvesting by hand also costs a dealing commission each time and often leaves cash idle for want of the price of a whole unit. An accumulating class on the same index, where one exists, settles the question.
With 18.6 billion in assets and 19 years of history, this fund has the size and the record that make closure unlikely and the spread narrow. Three checks remain, once a year, none of which depends on the market. The ongoing charge, which an issuer revises without notice and whose gap to a competitor can invert. The tracking difference, the only figure that says whether replication stays faithful. And the methodology of ICE BofA 5-10 Year US Corporate, which can change its selection or weighting rules without the fund's name moving, in which case what you hold has changed with nothing to announce it.
ICE BofA 5-10 Year US Corporate tracks a bond market, which changes the question: the return on a bond portfolio is largely known in advance, as yield to maturity, while its market value moves with rates and with the risk premium demanded of issuers. Two figures govern this fund, duration and average credit quality, and neither appears in an annual return. On corporate credit, correlation with equities rises precisely when protection was expected.
Over one year the fund shows -6.8% and over five years -3.1% annualised, two figures close together, which is the most ordinary and least informative configuration: it does not say the fund is steady, only that the chosen start and end points resemble each other. Comparing these figures with another fund means something only if the index is the same; otherwise it is an index comparison dressed as a fund comparison.
0.06%
18.6B
18,557M USDMedium
3,241
Physical
Distributing
USD
US
ICE BofA 5-10 Year US Corporate
iShares
2007-01-05 (19 years)
Contextual Analysis
Fund Size
With 18.6B in assets, this is a large fund, good liquidity and tight spreads.
Fee Positioning
A TER of 0.06% is among the lowest on the market, excellent value.
Track Record
Launched in 2007-01-05, this fund has 19 years of history, long and reliable track record.
Risk Profile
Medium risk, good risk/return balance for a 5+ year horizon.
Performance
Returns Summary
| Period | Ann. Return | Cumulative |
|---|---|---|
| 1 Month (est.) | – | -0.6% |
| 3 Months (est.) | – | -1.7% |
| 6 Months (est.) | – | -3.4% |
| YTD (est.) | – | -2.9% |
| 1 Year | -6.8% | -6.8% |
| 3 Years | +2.3% | +7.0% |
| 5 Years | -3.1% | -14.6% |
| Since inception (19y) | -2.5% | -38.6% |
Key Facts
Fund Profile
Themes & Zones
Holdings
Risk
How to Buy This ETF
Select your country in the menu to see available brokers and wrappers.
About this ETF
The iShares 5-10 Year Investment Grade Corporate Bond ETF tracks the ICE BofA 5-10 Year US Corporate index. It is managed by iShares using physical replication and follows a distributing distribution policy. The fund is denominated in USD and domiciled in US. It has a total expense ratio (TER) of 0.06%.
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Frequently asked questions
What do IGIB's 0.06% charges actually cost?
They are taken from the fund's value continuously and never billed separately: on £1,000 invested that is about £0.60 a year and roughly £6 over ten years at a constant amount. That is the only cost of the fund itself. Your broker's commission and the spread between buying and selling price come on top, and they weigh most on small frequent purchases.
Can a European investor buy IGIB?
Not always. This fund sits outside the UCITS framework, so most European brokers cannot offer it to a retail client for want of a key information document in their language. Two consequences follow: US withholding tax on dividends, reduced by treaty where a W-8BEN is filed, and US securities falling within US estate tax above a threshold that is low for a non-resident.
Does IGIB pay dividends?
Yes: the fund distributes and pays out the dividends it receives, on a calendar set by iShares. The payment is taxable in the year you receive it in most accounts, even if reinvested at once, and reinvesting by hand costs a commission each time. An accumulating class on the same index avoids that friction for anyone who does not need the income.
What is the real risk in IGIB?
Interest rates, not default. When rates rise, the value of bonds already issued falls, and the size of the move depends on the portfolio's duration: roughly one per cent per year of duration per point of rate. The figures to look at on this fund are therefore duration and yield to maturity, which says what the portfolio earns if nothing is sold. Neither appears in an annual return.
How do you buy IGIB, and on which venue?
Through any broker that lists ISIN US4642885887. The same strategy often exists in several share classes with different fees and distribution policies, and what counts is the class you buy rather than the one you read about: check the ISIN, not the name. A limit order avoids paying the spread of a thin order book, particularly outside the trading hours of the underlying markets.
This ranking is for informational purposes only and does not constitute a recommendation to buy or sell any security. Displayed performance is simulated.