Download Do you have hidden risks in your bond portfolio?

Do you have hidden
risks in your bond portfolio?
BlackRock sees hidden risks others miss, and helps solve them with fixed income.
When making investment choices, you should be aware of hidden risks in your portfolio.
Hidden risks we have uncovered are equity risk, interest rate risk and yield risk.
1
2
Equity risk
Do your bonds behave too
much like stocks? High yield and
corporate bonds are typically
affected by the same factors that
drive equity markets. If your goal
is to diversify stocks, core bonds
have delivered when the stock
market was down.
Interest rate risk
Even a small rise in rates can
lead to losses. While there is
a role for core bonds in your
portfolio, they may not guard
against rising interest rates.
Flexible funds and shorter
duration strategies can help you
manage interest rate volatility.
Average calendar year returns when
the stock market was negative1
Core bonds
%
+5.1
High yield
bonds
%
Stocks
-7.6
-13.6%
When
interest rates
RISE
Core bonds
AT RISK
+1%
-5%
Avg. duration:
5 years
Bond values
FALL
3
Yield risk
If your investments are too
conservative, you face the risk
of not earning enough to meet
your long-term goals. 2
6.0%
Bonds
3.6%
Bonds
after inflation
2.7%
Cash
0.3%
Cash
after inflation
Performance data quoted represents past performance and is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
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BlackRock solutions to consider
1
Diversify to help
balance equity risk
2
Manage interest
rate volatility
3
Seek attractive
income potential
BSIIX
Strategic Income
Opportunities Fund
BHYIX
High Yield Bond Fund
Strategic Municipal
Opportunities Fund
BMSIX
Credit Strategies
Income Fund
MAHQX
Total Return Fund
MANLX
National Municipal Fund
MAMTX
AGG
iShares® Core
U.S. Aggregate Bond ETF
NEAR
IUSB
iShares® Core Total USD
Bond Market ETF
CSJ
Want to know more?
iShares® Short Maturity
Bond ETF
EMB
iShares® J.P. Morgan
USD Emerging Markets
Bond ETF
iShares® 1-3 Year
Credit Bond ETF
PFF
iShares® U.S. Preferred
Stock ETF
blackrock.com Investing involves risk, including possible loss of principal.
Important Risks: Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a
corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make
principal and interest payments. There may be less information on the financial condition of municipal issuers than for
public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be
subject to federal or state income taxes or the Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable.
Diversification and asset allocation may not protect against market risk or loss of principal. International investing involves
risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial
volatility due to adverse political, economic or other developments. These risks often are heightened for investments in
emerging/developing markets, in concentrations of single countries or smaller capital markets.
The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment
strategy. There is no guarantee that any strategies discussed will be effective.
The information presented does not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a
given strategy or investment decision. Transactions in ETFs will result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged
to distribute portfolio gains to shareholders.
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by JPMorgan Chase & Co. This company does not make any representation regarding the advisability of
investing in the Funds. BlackRock is not affiliated with the company listed above.
1 Source: Morningstar as of 12/31/16. Core bond returns represented by IA SBBI IT Govt Index from 1926 to 1975 and the Bloomberg Barclays U.S. Aggregate Bond Index from 1976
to 2016. Stock returns are represented by IA SBBI Large Stock Index from 1929 to 1970 and the S&P 500 Index from 1971 to 2016. High yield bond returns represented by Bloomberg
Barclays U.S. Corporate High Yield TR USD Index from 1984 (when HY was introduced to the market) to 2016. 2 Source: BlackRock, Morningstar. As of 9/30/16. Assumes constant
annual inflation rates. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index. Cash is represented by the Barclays U.S. 1-3 Month Treasury Index. Cash returns
from inception of index, 11/30/1991. Inflation is represented by the Consumer Price Index. Index performance returns do not reflect any management fees, transaction costs or
expenses.
Carefully consider the Funds’ investment objectives, risk factors, and charges and expenses before investing. This and other information can
be found in the Funds’ prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.blackrock.com or
www.ishares.com. Read the prospectus carefully before investing.
©2017 BlackRock, Inc. All Rights Reserved. BLACKROCK and iSHARES are registered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All
other trademarks are those of their respective owners.
Prepared by BlackRock Investments, LLC, member FINRA.
Not FDIC Insured • May Lose Value • No Bank Guarantee
LIT NO. FI-RISK-0517
008236J-0517
20170428-138640-410110