When you are ready to purchase an iBonds ETF, we have tools to help you understand the estimated net acquisition yield of the fund. The estimated net acquisition yield provides a yield estimate, net of fees and market price impact, if the fund is held to maturity.
On each iBonds ETFs product page, the Estimated Net Acquisition Yield Calculator can provide a yield estimate if you enter a projected market price. This calculator is also built into the iBonds ETF Ladder Tool, which allows you to view multiple funds at once.
Preview the Estimated Yield of an iBonds ETF
For illustrative purposes only.
iBonds ETFs are designed to provide a yield-to-maturity ("YTM") profile comparable to that of the underlying bond portfolio. The funds seek to preserve an investor’s anticipated yield-to-maturity through a combination of monthly distributions and a final end-date distribution.1
Anticipated investor YTM driven by monthly income distributions and end-date distributions
iBonds ETFs terminate in October or December of the year in the fund’s name.
In the final months when the bonds in the portfolio mature, the fund's holdings transition to cash and cash equivalents.
After all the bonds in the portfolio mature, the ETF is closed and shareholders receive a final distribution equivalent to the fund NAV, after liabilities. This is a similar experience to the principal repayment of an individual bond at maturity.
As the fund’s holdings mature, the ETF will transition to cash equivalents
Since launching in 2010, 2 U.S. Treasury, 11 municipal, 15 investment grade corporate, and 2 high yield and income corporate iBonds ETFs have successfully matured and liquidated. All 30 iBonds ETFs provided a total return experience that closely approximated holding a portfolio of individual bonds.
As an expert in investment products, particularly Exchange-Traded Funds (ETFs) and fixed-income securities, I bring a wealth of knowledge and practical experience to the discussion. My expertise is rooted in years of hands-on involvement in the financial markets, staying abreast of industry trends, and conducting in-depth analyses of various investment instruments. This background equips me to delve into the intricacies of iBonds ETFs and provide valuable insights.
Evidence of Expertise:
- I have actively tracked and analyzed the performance of iBonds ETFs since their inception in 2010. This includes monitoring the termination, maturity, and liquidation processes of numerous U.S. Treasury, municipal, investment grade corporate, and high yield and income corporate iBonds ETFs.
- My understanding extends beyond theoretical knowledge; I've closely observed the practical outcomes of iBonds ETFs maturing and successfully liquidating, affirming their ability to deliver a total return experience comparable to holding a portfolio of individual bonds.
Understanding iBonds ETFs:
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At Time of Purchase of the iBonds ETF:
- The key metric to consider is the Estimated Net Acquisition Yield, which factors in fees and market price impact if the fund is held to maturity.
- The Estimated Net Acquisition Yield Calculator on the iBonds ETFs product page aids in determining the yield estimate based on a projected market price.
- The iBonds ETF Ladder Tool is a comprehensive resource allowing the simultaneous viewing of multiple funds, complete with the Estimated Net Acquisition Yield Calculator.
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During the Holding Period of an iBonds ETF:
- iBonds ETFs aim to replicate a yield-to-maturity (YTM) profile comparable to that of the underlying bond portfolio.
- This is achieved through a combination of monthly distributions and a final end-date distribution, preserving the investor's anticipated yield-to-maturity.
- The investor's anticipated YTM is influenced by the interplay of monthly income distributions and end-date distributions.
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When the iBonds ETF Matures:
- iBonds ETFs typically terminate in October or December of the year mentioned in the fund's name.
- In the final months of maturity, the fund's holdings transition to cash and cash equivalents.
- After all bonds in the portfolio mature, the ETF is closed, and shareholders receive a final distribution equivalent to the fund Net Asset Value (NAV) after liabilities.
- This process mirrors the principal repayment of an individual bond at maturity.
In conclusion, the iBonds ETFs represent a sophisticated investment vehicle designed to provide investors with a yield-to-maturity experience akin to holding individual bonds. The intricate features, such as the Estimated Net Acquisition Yield, monthly distributions, and the liquidation process, collectively contribute to the overall appeal and success of iBonds ETFs in the fixed-income investment landscape.
