What is the IHCB ETF used for?
The iShares IHCB ETF provides investors with access to the performance of investment-grade corporate bonds across global markets and sectors, hedged into Australian dollars. This is a relatively low-cost way to get exposure to global investment-grade corporate bonds in a single fund.
Investors could use the IHCB ETF to diversify an existing portfolio and gain exposure to global corporate bonds while potentially minimising the impact of Australian dollar volatility on investment returns. Additionally, IHCB could be used to create a regular income stream from the tri-annual distributions offered by this ETF. Bonds can be used in a portfolio to seek stability and generate income.
Keep an eye on FUM
The iShares IHCB ETF had $310.85 million of money invested when we last pulled the monthly numbers. Given IHCB’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the Fixed interest – International sector because we believe that relative to smaller ETFs, achieving this amount of FUM de-risks the ETF.
Fees and costs for investors
iShares charges investors a yearly management fee of 0.26% for the IHCB ETF. This means that if you invested $2,000 in IHCB for a full year, you could expect to pay management fees of around $5.20.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.51% or around $10.20 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
Summary
These are just some of the considerations or factors you would need to look at when weighing up the IHCB ETF. Before doing anything, take a look at our iShares IHCB report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.
