iShares Ultra Short Duration Bond Active ETF (ICSH)
Beating Treasuries With Minimal Risk: Why ICSH Remains A 'Buy'
iShares Ultra Short Duration Bond Active ETF remains a robust cash-parking vehicle, offering low risk and outperforming treasuries over the past three years. ICSH provides a 30 bps OAS, a 4.15% SEC yield, and an industry-leading 0.08% expense ratio, enhancing net returns versus peers. The ETF's portfolio is concentrated in A/AA-rated, ultra-short-term securities, resulting in minimal drawdowns—a maximum of -0.15% since January 2023.
ICSH: Time To Incrementally Raise Cash
I am incrementally raising cash given fewer compelling buy opportunities, especially outside the AI ecosystem. The iShares Ultra Short Duration Bond Active ETF is my preferred vehicle for parking cash due to its flexibility and safety. AI infrastructure spending dominates market performance, but eroding free cash flow margins and weakening balance sheets raise caution.
ICSH: Simple Cash ETF, Consistent Positive Spread To T-Bills, Solid Income
Federal Reserve rates remain elevated, as do rates on cash and cash alternatives. The iShares Ultra Short Duration Bond Active ETF is a simple cash ETF, consistently trading at a small spread to T-bills, currently yielding 4.4%. ICSH is a bit riskier, and more volatile than T-bills too, but the difference is small, and the overall risk-return is solid.
ICSH: High Return, Potentially Low Risk, And Short Duration
ICSH is an actively managed bond ETF focused on ultra-short investment-grade instruments. It was created with the objective of offering competitive yield and is achieving this, with exposure to around 208 holdings. It has only 2% in US Treasuries, which makes ICSH not exactly a proxy for T-Bills.
ICSH: Spreads Normalization In Money Markets
iShares Ultra Short Duration Bond Active ETF offers a compelling alternative to money market funds for parking liquidity with a slightly higher yield. ICSH benefits from active management, a low expense ratio (0.08%), and a short effective duration, making it cost-competitive and relatively insensitive to rate changes. The ETF maintains high credit quality (92% A or higher), rapid portfolio turnover, and a consistent yield profile versus peers, capturing a modest risk premium.
Cash Is King: Money-Market ETFs in Focus
Market uncertainty and high short-term yields put money-market ETFs like MINT, NEAR and ICSH in the spotlight for income and stability seekers.
ICSH: A Love Letter To Cash
Cash provides essential peace of mind, flexibility, and optionality, making it a core holding even during bull markets. Maintaining a 1-5% cash position is ideal for most investors, with higher allocations for retirees or near-retirees. ICSH stands out as my preferred cash equivalent ETF due to its high yield, low volatility, and broad, high-quality asset mix.
ICSH: A Yield That Might Justify The Risk, Especially Now
iShares Ultra Short-Term Bond Active ETF is a high-credit-quality, ultra-short-duration bond fund, offering a competitive yield and low expense ratio, making it a good cash alternative. I believe there's always an underlying imbalance in the market, clearly highlighted by the Equity Risk Premium (ERP) and the yield spread across different credit ratings. The negative Equity Risk Premium suggests a low reward for taking equity risk, favoring bonds, including short-term ones like ICSH.
ICSH: A Solid 'Dry Powder' Cash ETF
The iShares Ultra Short-Term Bond Active ETF offers income by investing in short-term debt securities and money market instruments. ICSH's low duration makes it a suitable cash park, outperforming other funds like the iShares 0-3 Month Treasury Bond ETF. ICSH has shown impressive performance, even surpassing newer ETFs targeting a six-month duration, despite the slight risk increase during dramatic rate changes in 2022-2023.
ICSH: A Decent Alternative To FLOT
The iShares Ultra Short-Term Bond Active ETF offers a lower expense ratio and similar effect as the iShares Floating Rate Bond ETF. Both ETFs are well-positioned in the current rate environment, with low duration bets rolling over efficiently into higher incoming rates according to the yield curve over medium term horizons. We continue to emphasize that the market is possibly still taking for granted just how valuable free trade has been, and how much prosperity might be lost to mercantilism.
ICSH: A Good Cash Alternative
Near-term risks for financial markets are real, with high complacency and overallocation to equities. The BlackRock Ultra Short-Term Bond ETF offers a good cash option for investors nervous about volatility.
ICSH: A Great Option For Cash
The BlackRock Ultra Short-Term Bond ETF is a better way than CDs and money markets for holding cash as it has more potential capital appreciation and a higher yield. ICSH has had much better returns than money market funds over the last 10 years. We rate ICSH a "strong buy."
Is It Safe to Invest Today? Here's a Better Question to Ask.
You don't want to overpay by buying stocks at a market top. There's no way to know when a market has hit bottom, so you can't be sure you're not catching a falling knife in bad markets.
ICSH: It's Going To Be Higher For Longer In The U.S.
Most of the macro data points to a higher for longer situation. Indeed, reflexivity effects even work against Fed objectives and may force them to crank things up. ICSH gets investors a low duration exposure that isn't at risk as rates potentially rise further, or trounce newfound expectations of a pivot.
ICSH: Useful As Cash Replacement But Mind The Risks
The BlackRock Ultra Short-Term Bond ETF is marketed as a cash replacement tool, offering higher yields than money market funds. ICSH outperforms 'cash' in most scenarios but can underperform during rising interest rate environments and is exposed to credit risk. I prefer the safety of treasury bills for cash allocation due to zero credit risk and little duration risk.
3 Low-Cost Actively-Managed ETFs to Buy Now
While actively managed ETFs are less popular than passive ETFs, some are worth considering for your investment portfolio. However, let me make something clear: passive investing continues to capture market share from active management.
What's Inside Active Bond ETFs
In the three-year period ended 2022, 48% of actively managed investment-grade intermediate fixed income mutual funds outperformed the Bloomberg US Aggregate Bond Index, per the SPIVA Scorecard. This contrasts with just 26% of active U.S. large-cap equity mutual funds outperforming the S&P 500 Index.
ICSH: Cash Parking Pays Almost 5.5%
ICSH has outperformed cash parking alternatives like MINT and NEAR. It likely comes from its meagre expense ratio coupled with active management. It is highly likely to outperform Treasury bills from here, especially as credit spreads widen.
ICSH: Ultra Short-Term, Ultra Low Volatility, But Carries Some Risk
ICSH is one of several short-term income-oriented ETFs I've covered recently. I'd consider it in the upper half of the set of these I track, though it has its issues.
ICSH: Why Cash Is Better Than Put Options
We are currently experiencing a vicious bear market with a substantial amount of volatility. Investors have purchased historically high amounts of put options.