A strong management team and sound investment process underpin iShares ESG Advanced Ttl USD Bd Mrkt ETF's Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in BB rated bonds and has a considerable overweight in government bonds compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

iShares ESG Advanced Ttl USD Bd Mrkt ETF earns an Above Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. The largest contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's five-year risk-adjusted success ratio of 55% also influences the rating. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by its parent firm's risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.1 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to track the Bloomberg MSCI US Universal Choice ESG Screened Index.  The index is a modified market value-weighted index designed to reflect the performance of U.S. dollar-denominated, taxable bonds with favorable ESG ratings while applying extensive screens. The fund generally will invest at least 90% of its assets in the index and in investments that have economic characteristics that are substantially identical to the component securities of the index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, and as well as in securities not included in the index. It is non-diversified.  

 This strategy has a modest 3.2% 12-month yield, lower than its average peers' 3.9%. A lower yield tends to indicate lower credit risk. The portfolio has a higher average surveyed credit quality of A, compared with the category average of BBB, and 5% of the strategy's assets are rated non-investment-grade compared with its average peers' 8%. Strategies that take on less credit risk can often weather more-adverse market conditions. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 5.7-year duration, is expected to gain 5.7% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Above Average

Process

iShares’s team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are two managers listed on the fund: Karen Uyehara, James Mauro. The team is well equipped, with an average of 14 years of portfolio management experience. Together, they manage a total of 114 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares ESG Advanced Total USD Bond Market ETF

EUSB tracks a broad array of USD-denominated bonds, without restriction of credit quality or duration, from issuers with favorable ESG ratings as viewed by MSCI research and screened further to remove those issuers for involvement in controversial activities.

iShares Core U.S. Aggregate Bond ETF

iShares ESG Aware US Aggregate Bond ETF

Ishares ESG Advanced Investment Grade Corporate Bond ETF

iShares iBoxx High Yield Corporate Bond ETF

iShares Trust iShares 1-5 Year Investment Grade Corporate Bond ETF

iShares iBoxx $ Investment Grade Corporate Bond ETF

Nuveen Enhanced Yield U.S. Aggregate Bond ETF

NuShares ESG U.S. Aggregate Bond ETF

iShares ESG Aware 1-5 Year USD Corporate Bond ETF

iShares ESG USD Corporate Bond ETF

Vanguard ESG U.S. Corporate Bond ETF

Vanguard Total Corporate Bond ETF

As the energy sector continues to trounce other sectors in 2022, a portfolio of corporate bonds with reduced energy sector exposure seems less than ideal. However, year-to-date, investors have bucked the trend to put net millions into ESG bond ETFs.

Millions Are Still Flowing Into ESG Bond ETFs

In 2020, issuers finally got around to bolstering fixed income environmental, social, and governance (ESG) offerings. The iShares ESG Advanced Total USD Bond Market ETF (EUSB), which debuted in June, is part of that group.

News for iShares ESG Advanced Total USD Bond Market ETF ETF (EUSB)