iShares Core Sterling Corporate Bond ETF: August 2026 update

• BlackRock has been managing index portfolios since 1971

• This ETF provides access to a range of sterling corporate bonds

• It has tracked the Markit iBoxx GBP Liquid Corporates Large Cap Index closely over the long term

How it fits in a portfolio

An ETF is a basket of investments that often includes shares or bonds. They tend to track the performance of an index such as the Markit iBoxx GBP Liquid Corporates Large Cap Index and trade on stock exchanges, like shares. This means that their price fluctuates throughout the day.

The iShares Core Sterling Corporate Bond ETF invests in a range of investment grade corporate bonds issued in Sterling. Investment grade bonds are deemed to be lower risk and more likely to be repaid than some other types of lending, such as high-yield bonds.

This ETF is a simple and low-cost way to invest in sterling corporate bonds. It could help diversify an investment portfolio focused on shares, or a more conservative portfolio in need of some income.

Manager

Each ETF 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 ETF.

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

Process

This ETF aims to track the performance of the Markit iBoxx GBP Liquid Corporates Large Cap Index. It does this by investing in almost every bond in the benchmark, but not all. This is known as partial replication, which could help the ETF track the index closely without incurring the cost of holding every bond.

As at the end of July 2026, the ETF invests in 568 bonds issued by companies in sectors like industrials, utilities and financials. It includes the most liquid bonds in this area of the market, those that can most easily be bought and sold. Although it’s focused on investment grade bonds, with a credit rating of at least BBB, the ETF can hold some high yield bonds at times, which increases risk.

Should a bond’s credit rating change from high yield to investment grade, or vice versa, BlackRock will trade 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 ETF, factors like taxes, dealing commissions and spreads, and the cost of running the fund all drag on performance.

The ETF 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 ETF. 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.

As this ETF is listed offshore, investors are not usually entitled to compensation from the UK Financial Services Compensation Scheme.

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 index investment space and has a track record of innovation in this part of the market.

The team running this ETF 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 ETF 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, screened some thermal coal companies out from its actively managed funds, and 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 quarterly ‘Engagement Summary’ reports.

BlackRock has faced sustained criticism in recent years for the limited support 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.

The iShares Core Sterling Corporate Bond ETF tracks an index that doesn’t specifically integrate ESG analysis or exclude bonds issued by companies in industries like defence or tobacco.

Cost

The ETF currently has an ongoing annual fund charge of 0.20%. Ensuring that an ETF has a low charge is an important part of tracking the underlying index closely.

The annual charge to hold ETFs in the HL Stocks & Shares ISA, SIPP or Fund & Share Account is 0.35% (capped at £150 p.a. in each account) and 0.25% in the HL Lifetime ISA (capped at £45 p.a.). There are no charges from HL to hold ETFs within the HL Junior ISA. As ETFs trade like shares, both a buy and sell instruction will be subject to the HL share dealing charges.

Performance

The ETF has done a good job of tracking its benchmark, the Markit iBoxx GBP Liquid Corporates Large Cap Index, and in the last 10 years, it has returned 10.9%*. As is typical of ETFs, it has fallen behind the benchmark over the long term because of the costs involved in running it. 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.

During the past year, the ETF 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 July 2026, the ETF’s yield was 5.76%. Yields aren’t guaranteed and shouldn’t be considered a reliable indicator of future income.

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