This bond ETF tracks the ICE BofA 5-10 Year US Corporate Index and diversifies across US investment-grade corporate bonds with 5 to 10 years to maturity. It seeks a balance between interest income and interest rate risk in the intermediate duration range.

It suits bond investors who want higher interest income than short-term bonds offer but wish to avoid the interest rate volatility of long-term bonds.

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

The fund broadly holds USD-denominated investment-grade corporate bonds in the index with 5 to 10 years to maturity, tracking the performance of the intermediate credit market. It regularly rotates its holdings as new bonds are issued and existing ones mature, and its intermediate duration diversifies both interest rate and credit risk at the same time.

• Credit exposure focused on the intermediate 5 to 10 year maturity range
• Low expense ratio and broad bond diversification

Assets under management (AUM) stand at $19.5B, and the total expense ratio is 0.04% per year.

Its cost burden is relatively low compared with peer intermediate corporate bond ETFs, and broad bond diversification mitigates the risk of any single issuer.

Given the nature of bond prices, the net asset value rises and falls with the direction of interest rates: prices tend to rise when rates fall, and downward pressure grows when rates rise. Interest income tends to provide a stable and substantial portion of total return.

Fund flows fluctuate with demand for intermediate-duration credit and with interest rate expectations. When rates are perceived to have peaked, money sometimes flows into intermediate-term bonds, and in periods of risk aversion, demand can shift toward investment-grade credit.

Its strengths are stable intermediate-duration interest income and a low expense ratio, while its weakness is exposure to interest rate and credit fluctuations.

The three funds shown in the table, VCIT, SCHI, and SPIB, are direct comparisons in the same intermediate investment-grade corporate bond category, and they differ in tracking index and expense ratio, so they are worth reviewing together. For a shorter maturity, IGSB, a short-term corporate bond ETF, is a direct alternative, and for longer maturity and higher duration exposure, IGLB, a long-term corporate bond ETF, is a direct alternative. Investors who prefer exposure to the overall bond market can also consider AGG, a broad bond ETF.

Here are the points to check before investing in IGIB. As an intermediate investment-grade corporate bond ETF, it helps to review the direction of interest rates, the credit environment, duration, and exchange rates in advance.

Rising interest rates and wider credit spreads are the main drivers of declines in net asset value. During an economic slowdown, even investment-grade corporate bonds can see greater price volatility, so duration and credit risk should be reviewed together.

It is a suitable choice for bond investors who want intermediate-duration investment-grade credit exposure at a low cost. If you want a shorter maturity, compare IGSB, and if you want a longer maturity, compare IGLB, to adjust your duration.