iShares iBonds 2028 Term High Yield and Income ETF (IBHH) seeks to track a portfolio of high-yield corporate bonds that mature in 2028, providing defined-maturity exposure to below-investment-grade debt securities. This target-date bond ETF offers predictable income through a 5.43% dividend yield while returning principal at maturity.
How It Works
IBHH employs a buy-and-hold strategy, purchasing high-yield corporate bonds with maturities clustered around 2028 and holding them until expiration. The fund uses a passive approach with bonds weighted by market value, focusing on BB and B-rated corporate debt. As bonds mature or are called, proceeds are distributed to shareholders, with the ETF designed to terminate around December 2028 when substantially all holdings reach maturity.
Key Features
- Defined maturity date eliminates duration risk—fund terminates in 2028, returning remaining principal to investors
- High current income at 5.43% dividend yield from below-investment-grade corporate bonds
- Zero expense ratio reduces costs compared to traditional high-yield bond funds charging 0.50-1.00% annually
Risks
- This ETF can lose value if corporate issuers default on their bonds, with high-yield debt experiencing 2-4% annual default rates historically
- Credit downgrades or widening spreads can cause significant price declines, potentially 10-20% during economic stress periods
- Interest rate increases before 2028 can reduce bond values, though impact diminishes as maturity date approaches
Who Should Own This
Best suited for income-focused investors with medium-to-high risk tolerance seeking predictable cash flows through 2028. Ideal as satellite holding (5-15% of fixed income allocation) for those wanting higher yields than investment-grade bonds. Six-year time horizon required to benefit from maturity structure and avoid selling at potential losses.