The fund holds high-yield corporate bonds, along with some investment-grade corporate bonds, that mature within the designated year. At the end of that year, the fund is liquidated and its assets are returned to shareholders. As time passes, the remaining maturity of the portfolio shortens, which reduces the risk of price swings caused by interest rate changes.

It suits investors who plan to use their money at a specific point in time, or who want to capture the high yields of high-yield bonds while building a stable bond ladder with fixed maturities.

It is a passively managed (index-tracking) ETF launched by BlackRock in 2020.

The fund holds corporate bonds maturing within the designated year in proportion to their market capitalization, and raises its cash allocation as maturity approaches in order to prepare for liquidation. Unlike typical bond ETFs, its duration declines naturally, so the strategy makes it easier to forecast the target return.

• A fixed-maturity structure, like an individual bond
• Relatively high income through high-yield bonds

Assets under management (AUM) stand at $620.3M, and the total expense ratio is 0.35% per year.

As maturity approaches, interest rate sensitivity falls and the price tends to converge toward par value. With the high-rate environment persisting in recent months, the high coupon income from high-yield bonds has driven overall performance.

Demand for building bond ladders targeting a specific maturity year remains steady, and capital continues to flow in from investors who want protection against interest rate volatility while still seeking high yields.

The fixed-maturity structure makes interest rate risk easier to manage and offers a high yield, but the default risk inherent in high-yield bonds must be taken into account.

While LQD and USIG shown in the table focus on high-quality investment-grade corporate bonds, IBHF has a larger allocation to high-yield bonds that aim for higher returns. General high-yield ETFs such as HYG, USHY, and SPHY have no fixed maturity and are therefore continuously exposed to changes in market interest rates, whereas IBHF has a clear end date, which makes interest rate risk easier to manage. It is well suited to combining with products of different maturities to build a bond ladder, and it is an efficient investment tool for investors who need to recover their funds at a specific point in time.

This is a checklist to review before considering an investment in IBHF. You should comprehensively examine the characteristics of target-maturity products and the credit environment of the high-yield sector.

Because the fund concentrates on high-yield bonds, issuers' ability to repay may weaken during a recession, and if market conditions deteriorate near maturity, there is a risk of returns coming in lower than expected.

It is a suitable product for investors who want stable income and return of principal. However, it is advisable to understand the volatility of the high-yield sector and approach the investment from a diversification perspective.