iShares Corporate Bond Index: August 2026 fund update

• BlackRock, a pioneer in index investing, has a great record of managing index funds

• We view this fund as a good option to get access to a broad spread of sterling corporate bonds

• It has closely tracked the iBoxx Sterling Non-Gilts Index since launch in 2010

• This fund currently features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The iShares Corporate Bond Index fund offers a way to invest broadly across the sterling corporate bond market. As well as corporate bonds, the fund invests in bonds issued in Sterling by governments, government agencies and supranationals but excludes gilts, which are bonds issued by the UK government.

An index fund is one of the simplest methods of investing, and we think that this fund could be a great, low-cost addition to an investment portfolio. Bonds can be a useful way to help diversify a portfolio focused on shares or other assets, or a more conservative portfolio in need of some income.

Manager

Each index fund at BlackRock has a primary and secondary manager, though in practice the broader team helps to manage each fund. Divya Manek is Head of the Fixed Income Portfolio Management team and the primary manager of this fund.

BlackRock also has other teams that trade shares and bonds based across the world. The teams function in different time zones, which means that they have access to timely information and can provide input on market trends and corporate actions. Their global approach helps drive efficient management of their funds and provides simple and effective tracking options for investors.

Process

This fund aims to track the performance of the broader corporate bond market, as measured by the iBoxx Sterling Non-Gilts Index. It invests in almost every bond in the index. This is known as partial replication, which could help the fund track the index closely without incurring the cost of holding every bond. Bonds that make up a very small part of the index can be more difficult or expensive to buy and sell.

The fund invests in about 1,250 bonds. Although it holds mainly investment grade bonds, with a credit rating of at least BBB, it can hold some high-yield bonds at times, which increases risk.

When a bond’s credit rating is upgraded, so that it transitions from high yield to investment grade or vice versa, BlackRock trades bonds internally across all its own funds. This reduces transaction costs, which helps to keep the fund’s performance close to the benchmark.

However, as with any index tracker fund, factors like taxes, dealing commissions and spreads, and the cost of running the fund all drag on performance.

The fund can lend some of its investments to others in exchange for a fee in a process known as stock lending. This offsets some of the costs involved with running the fund. Since BlackRock’s lending program started in 1981, only three borrowers with active loans have defaulted. In each case, BlackRock was able to repurchase every security out on loan with collateral on hand and without any losses to their clients. Even so, stock lending adds risk.

Culture

BlackRock is the largest asset manager in the world, running around $15trn of assets globally. The company was founded by eight partners including current CEO Larry Fink and is known for both active and passive strategies. Employees at BlackRock are encouraged to hold shares in the company so that they are engaged with helping the company perform well and grow. The iShares brand represents BlackRock's family of index tracking and exchange-traded funds.

As the world's largest asset manager, and with lots of resource and knowledge under its belt, BlackRock benefits from unique access to the marketplace, which can help reduce trading costs. BlackRock is also a pioneer in the passive investment space and has a track record of innovation in this part of the market.

The team running this fund works closely with various fixed income and risk departments across the business. We believe that this adds good support and challenge on how to run the fund effectively.

ESG Integration

BlackRock was an early signatory to the Principles for Responsible Investment (PRI) and has offered Environmental, Social and Governance (ESG)-focused funds for several years, including through its iShares range of index products. However, it made a company-wide commitment to ESG only in January 2020. Since that announcement, the company has expanded its range of ESG-focused ETFs, has screened some thermal coal companies out from its actively managed funds, and now requires all fund managers to consider ESG risks.

BlackRock’s Investment Stewardship Team aims to vote at 100% of meetings where it has the authority to do so. The Investment Stewardship team engages with companies, in conjunction with fund managers, and the results of proxy votes can be found on the BlackRock website’s ‘proxy voting search’ function, complete with rationales for votes against management. The firm also outlines its work on voting and engagement in an annual ‘Voting Spotlight’ report and in quarterly ‘Engagement Summary’ reports.

BlackRock has faced sustained criticism in recent years for the limited support that it has given to shareholder resolutions focused on climate and other environmental and social issues. Although the firm has increased transparency around its voting activity and now routinely provides rationales for key votes, its support for environmental and social shareholder proposals has declined sharply, from around 40% in 2021 to less than 2% in 2025. BlackRock argues that many such proposals are overly prescriptive, lack economic merit or do not promote long-term shareholder value, although this position was met with scepticism by some stakeholders.

In 2024, BlackRock’s US arm stepped back from the Climate Action 100+ collective engagement initiative, citing legal considerations, although its international arm remained a member.

iShares Corporate Bond Index tracks a benchmark that does not specifically integrate ESG analysis or exclude bonds issued by companies in industries like defence or tobacco.

Cost

The fund usually has an annual ongoing charge of 0.11%, but with a 0.04% saving it’s available to HL clients for 0.07%. We believe that this is good value when compared with other sterling corporate bond tracker funds on the HL platform.

Our platform charge of up to 0.35% per annum also applies, except in the HL Junior ISA, where no platform fee applies. Both a buy and sell instruction will be subject to HL dealing charges. Find out more about our charges

Performance

Since launch in June 2010, the fund has done a good job of tracking its benchmark, returning 68.8%. As is typical of index funds, it has lagged the benchmark over the long term because of the costs involved in running the fund. However, the tools used by the managers have helped to keep performance close to the index. Remember, past performance isn’t a guide to future returns.

Over the past year, the fund has delivered positive returns, although performance has been volatile at times as investors continued to assess the path for inflation and interest rates. This is because bond yields move in the opposite direction to prices. Usually, when interest rates are cut, bond yields fall, and prices rise.

The Bank of England cut interest rates throughout 2025 as inflation continued to ease from its post-pandemic highs. However, ongoing conflict in the Middle East pushed energy prices higher, leading to concerns that inflation could gather pace and prevent interest rate cuts or even see rates rise. As a result, bond prices have been volatile.

At the end of June 2026, the fund’s yield was 5.28%. Yields aren’t guaranteed and shouldn’t be considered a reliable indicator of future income.

Given BlackRock's size, experience and expertise running index tracker funds, we expect the fund to continue to track the index well in future, though there are no guarantees.

The period between 31 July 2021 and 31 July 2022 reflects the performance of the H Class version of the fund. Performance from 31 July 2022 onwards reflects the performance of the S Class version of the fund. This is due to when each share class was launched.