IGSB vs ZTWO

IGSBAiShares 1-5 Year Investment Grade Corporate Bond ETF

ZTWO—F/M 2-Year Investment Grade Corporate Bond Etf

In short

IGSB Corporate credit with the rate risk dialed down: roughly 4,700 investment-grade bonds, none maturing past five years, for four basis points. iShares has run it since 2007.

ZTWO Most funds in the target-maturity aisle have an expiration date. ZTWO doesn't: it keeps rolling, always holding investment-grade corporate bonds 1.5 to under 2.5 years from maturity, so the two-year rung never empties.

Stated mandate

IGSB The fund seeks to track an index containing U.S. dollar-denominated investment-grade corporate bonds with remaining maturities from one through five years.

ZTWO The fund is passively managed and seeks to track, before fees and expenses, the price and yield performance of the ICE 2-Year US Target Maturity Corporate Index. It normally invests at least 80% of net assets in investment-grade corporate bonds with 1.5 to less than 2.5 years remaining to maturity.

Why people hold it

• IGSB Four basis points a year, a fraction of the typical investment-grade corporate bond fund's fee and level with the cheapest tier of its peer group.
• One-to-five-year maturities mean prices move less when rates move than long-dated corporate funds. Same corporate credit, shorter leash.ishares.com
• Thousands of individual bonds tracking the ICE BofA 1-5 Year US Corporate Index, with income paid monthly.ishares.com
• Trading since 2007, actively traded, and one of the strongest builds in the investment-grade corporate group on cost, portfolio and execution.

• ZTWO No maturity date. The index resets, so the fund always holds corporates 1.5 to under 2.5 years out instead of liquidating on a set date and handing back cash to redeploy.yahoo.com
• Roughly 300 investment-grade corporate bonds, index-picked. No single-issuer wager, and one of the cleaner, better-diversified portfolios in its peer group.
• Short maturities mean less price movement when rates swing than longer corporate bond funds, and interest is passed through monthly.

Worth knowing

• IGSB Short maturities cut both ways: less price damage when rates rise, less lift when they fall.
• These are company bonds, not Treasuries. Investment grade, but credit spreads can widen and prices move with them.
• Only the front of the curve. Sibling IGIB runs 5-10 years and USIG spans broad maturities, both at the same fee.

• ZTWO 0.15% a year. The big defined-maturity ladders (IBDU, BSCT) run cheaper; that gap is the toll for the rolling structure.
• Nothing matures. Ladder builders who want a dated return-of-principal moment get that from BulletShares and iBonds, not from a perpetual fund.
• Young, small and lightly traded next to the iShares and Invesco lineups, so spreads can widen. Limit orders earn their keep.

Full IGSB profile⁠

Full ZTWO profile⁠