iShares Launches Bond Factor ETF

'USBF' aims to apply smart beta to the bond markets.

Reviewed by: Dan Mika
Edited by: Dan Mika

iShares is adding to its large stable of ETFs with a bond fund driven by a multifactor index.

The iShares USD Bond Factor ETF (USBF) debuted on the Nasdaq Thursday, sporting a 0.18% exchange ratio.

USBF will track an in-house BlackRock index that uses macroeconomic factors and a value and quality factor to choose bonds to outperform the aggregate bond market while maintaining a similar risk structure. Any U.S.-dollar-denominated bond is eligible for inclusion on the index regardless of investment quality.

The index rebalances on the last business day of each month.

The closest existing competitor to USBF is the WisdomTree Yield Enhanced U.S. Aggregate Bond Fund (AGGY), a $1.1 billion fund launched in 2015. While AGGY is limited to investment-grade assets, it uses its own multifactor indexing strategy to seek higher yields than the broader bond market while keeping its risk profile in line.

Contact Dan Mika at [email protected], and follow him on Twitter

Dan Mika is a reporter for He has previously covered business for the Ames Tribune and Cedar Rapids Gazette in Iowa, and BizWest Media in Fort Collins, Colorado. Dan holds a bachelor's degree in journalism from Truman State University.