This ETF tracks the BlackRock Interest Rate Hedged Long-Term Corporate Bond Index. It holds US dollar-denominated investment-grade corporate bonds with maturities of more than 10 years and uses interest rate derivatives to offset duration exposure, focusing on credit spreads rather than the direction of interest rates.

It suits investors who want the credit returns of long-term corporate bonds but wish to avoid price swings caused by rising interest rates.

It is a passively managed (index-tracking) ETF run by iShares (BlackRock).

The fund holds US investment-grade corporate bonds with maturities of more than 10 years as its underlying assets and offsets duration through short positions in interest rate derivatives. This lowers the bonds' interest rate sensitivity and concentrates exposure on returns generated by credit spreads.

• Offsets the interest rate duration of long-term corporate bonds through hedging
• Credit exposure centered on credit spreads

Assets under management (AUM) stand at $275.4M, and the expense ratio is 0.14% per year.

The key difference from IGLB, a comparable long-term corporate bond ETF that does not hedge interest rates, is its lower sensitivity to interest rate changes.

Thanks to its interest rate hedging structure, the fund tends to show milder price volatility than unhedged long-term corporate bonds when rates are moving. However, when credit spreads widen, it remains fully exposed to the risks inherent in corporate bonds.

In environments of high uncertainty about the direction of interest rates, money tends to flow in from investors seeking to control duration risk. Conversely, when expectations of rate cuts are strong, the hedging structure can be relatively disadvantageous.

Its strength lies in hedging interest rate risk to reduce duration swings, while hedging costs and credit risk exposure are points to watch.

For the same long-term corporate bond exposure without an interest rate hedge, IGLB is the most direct comparison, and for diversification across investment-grade corporate bonds of a broader range of maturities, LQD can also be considered. HYGH applies the interest rate hedging structure to high-yield corporate bonds, so you can compare options based on credit rating and whether rates are hedged.

Here are the points to review before investing in IGBH. It is important to understand how the interest rate hedging structure offsets duration, as well as the corporate bond credit risk and currency exposure that remain after hedging.

Interest rates are hedged, but when credit spreads widen, the fund is exposed to the risk of falling corporate bond prices. Hedging costs and the efficiency of derivatives management can also affect long-term returns.

It is a suitable choice for investors who want to capture the credit returns of long-term corporate bonds while controlling interest rate risk. If you want to keep your interest rate exposure, IGLB is an alternative, and if you want broader maturity diversification, LQD is an alternative.