What does iShares Interest Rate Hedged Bond ETF do?

iShares Interest Rate Hedged Corporate Bond ETF (NYSEARCA:LQDH) operates as an exchange-traded fund designed to mitigate the interest rate risk of a portfolio composed of U.S. dollar-denominated, investment-grade corporate bonds. It achieves this by holding a diversified portfolio of bonds while simultaneously engaging in interest rate swaps to hedge against potential losses due to rising interest rates. The project's primary objective is to provide investors with a steady income stream while protecting the investment from fluctuations in interest rates. Its strategy involves carefully selecting corporate bonds that offer the best balance between yield and credit risk, and dynamically adjusting its hedging positions based on market conditions to optimize returns for investors.
iShares Interest Rate Hedged Bond ETF company media

Company Snapshot

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Ownership

Public
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Sector

ETF
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Head Office

San Francisco, United States
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Year Founded

2014

What does iShares Interest Rate Hedged Bond ETF specialise in?

/Corporate Bonds /Interest Rate Hedging /Exchange Traded Fund /Risk Management /Investment Services /Fixed Income

What are the products and/or services of iShares Interest Rate Hedged Bond ETF?

Overview of iShares Interest Rate Hedged Bond ETF offerings
Investment in Investment-Grade Corporate Bonds: LQDH invests in a basket of U.S. dollar-denominated corporate bonds issued by companies with strong creditworthiness. These are typically investment-grade bonds, meaning they have a lower risk of default compared to high-yield bonds.
Interest Rate Hedging Strategy: LQDH uses investment strategies to mitigate the impact of fluctuations in interest rates. This can be achieved through various methods like futures contracts or swaps. The goal is to isolate the performance of the underlying companies' bonds and minimize the influence of interest rate changes on the overall ETF value for investors.
Potential for Income Generation: Corporate bonds typically provide regular interest payments to investors. LQDH offers the potential for investors to receive these income streams generated by the underlying bonds held by the ETF.
Potential for Capital Appreciation: While income generation is a key feature, LQDH also offers the potential for capital appreciation if the market value of the underlying bonds increases. This can happen due to various factors like improved credit quality of the issuers or a general decline in interest rates.
Diversification Within Investment-Grade Bonds: By holding a basket of bonds from various companies across different sectors, LQDH offers diversification within the investment-grade corporate bond market. This reduces concentration risk on any single bond issuer.
Reduced Interest Rate Fluctuation Risk: Compared to a non-hedged corporate bond ETF, LQDH aims to reduce the volatility caused by fluctuations in interest rates. This can be beneficial for investors seeking exposure to corporate bonds with a minimized impact of interest rate changes on the overall ETF value.