These top-rated funds make excellent long-term investments in 2023 and beyond.
With more than $8 trillion in assets under management, BlackRock is the largest asset manager in the world. Passive strategies make up about two thirds of those assets. In particular, the firm’s well-known iShares exchange-traded funds are low-cost solutions for both advisors and individual investors building well-diversified portfolios. The firm also offers some topnotch active bond funds and a compelling target-date series.
Morningstar’s list of the best iShares ETFs and BlackRock mutual funds in 2023 features top-rated funds that we expect to outperform their competitors over a full market cycle. Investors can confidently buy and hold these funds in a long-term portfolio.
These iShares ETFs investing in stocks or bonds earn a Morningstar Analyst Rating of Gold as of March 2023.
This list of top-rated iShares ETFs covers what many would consider to be the core building blocks of an investment portfolio: U.S. stocks, U.S. bonds, and international stocks. The firm also offers dozens of ETFs targeting more-refined parts of the market, including a variety of style, market cap, sector, and global strategies. Some of these ETFs earn Morningstar ratings of Silver or Bronze and may therefore be other strategies to consider beyond the top-rated ETFs included here.
Here’s a little bit about each of the best iShares ETFs on the list from Morningstar’s analysts.
The first of two Gold-rated U.S. stock ETFs on the list, iShares Core S&P 500 ETF provides exposure to U.S. large-cap stocks at a low cost. The ETF replicates the S&P 500, which is a market-cap-weighted index of 500 of the largest U.S. stocks that are chosen by an index committee based on liquidity and profitability standards. Management has done a good job of tracking its index, using derivatives to manage its cash, and employing securities lending to generate additional income to help keep the ETF’s expense ratio low.
This ETF offers exposure to the entire investable U.S. stock market. It tracks the S&P Total Market Index, which includes all U.S.-domiciled stocks that trade on a major U.S. exchange and pass S&P’s minimum liquidity threshold. Although iShares Core S&P Total US Stock Market ETF lands in Morningstar’s large blend category, too, it provides exposure to mid- and small-sized companies, unlike iShares Core S&P 500 ETF. That being said, the largest stocks in the U.S. make up the bulk of this ETF’s portfolio due to the index’s market-cap weighting.
Morningstar director Bryan Armour calls iShares Core US Aggregate Bond ETF “one of the best core bond funds on the market.” It tracks the Bloomberg U.S. Aggregate Bond Index, which includes taxable, investment-grade U.S.-dollar-denominated bonds with at least one year until maturity. The index is tilted toward the largest and most liquid U.S. Treasuries, corporate bonds, and agency mortgage-backed securities. The fund earns an Above Average Process rating for its effective representative sampling of its index.
Read more: What Gives an Edge to iShares Core US Aggregate Bond ETF?
This ETF casts a wider net than iShares Core US Aggregate bond by tracking the Bloomberg US Universal Index, which includes taxable bonds across the entire credit spectrum with at least one year until maturity. Because this index includes high-yield corporate bonds, dollar-denominated emerging-markets bonds, and other lower-quality credits, iShares Core Total USD Bond Market ETF takes on a bit more credit risk than its sibling and lands the fund in the intermediate core-plus bond Morningstar Category.
The final Gold-rated iShares ETF on our list, iShares Core MSCI Total International Stock ETF, provides low-cost access to the entire international stock market outside of the U.S. Tracking the MSCI ACWI ex USA Investable Market Index, the ETF owns large-, mid-, and small-cap stocks weighted by market cap; given the market-cap-weighting approach, the portfolio skews toward larger-cap stocks. It’s well diversified and would be a fine companion to a U.S. total market fund, such as iShares Core S&P Total US Stock Market ETF.
These BlackRock mutual funds investing in stocks, bonds, or some combination of the two have at least one share class that earns a Gold rating as of March 2023.
Four of the funds on the list invest in bonds (and the group’s target date series invests in part in bonds, too), a longtime strength of BlackRock’s. Unlike with the firm’s iShares lineup, investors can’t as elegantly build a diversified core portfolio using only BlackRock’s Gold-rated mutual funds—though the firm’s Lifepath Index Target-Date Series does offer investors excellent, well-diversified, one-stop vehicles for saving for retirement.
Here’s a little bit about each of the top-rated BlackRock mutual funds on the list from Morningstar’s analysts.
BlackRock CIO of global fixed income Rick Rieder leads the management team of this actively managed bond fund. Reider and team identify broad trends that the firm expects to play out over two and four quarters, while sector teams then handle security selection within those themes. The fund invests primarily in U.S. investment-grade bonds and seeks to outperform the Bloomberg U.S. Aggregate Bond Index. Notably, the fund often uses some leverage and can take small positions in less-conventional holdings for a core-plus bond fund, including options on the S&P 500 and foreign currencies.
Here, too, Rieder and his team apply their blend of top-down macroeconomic research and bottom-up securities selection—but this strategy is flexible and doesn’t seek to outperform a particular benchmark. Investments include but extend beyond U.S. high-quality bonds, into high-yield bonds, bank loans, and international developed and emerging-markets sovereign and corporate debt. The team will use derivatives to hedge risk and take outright positions. It’s a wide-ranging strategy.
BlackRock Strategic Global Bond invests largely in higher-quality bonds across the globe and benchmarks itself against the Bloomberg Global Aggregate Bond Index—though the managers can (and do) stray far from the index’s allocations. For example, emerging-markets exposure has been as low as 6% and as high as 75% of the portfolio, versus a 5%-8% range for the index. Here, too, Reider and the team balance macro positioning with valuation-driven moves.
The team at BlackRock High Yield Bond takes a more versatile approach than other funds in the high yield bond fund category. While the portfolio’s main focus is U.S. high-yield bonds, owing to its size it may also dabble in bank loans and investment-grade corporate bonds, equities, and ETFs, to maintain liquidity and pursue particular macro themes. Yes, here, too, management blends top-down themes with bottom-up security selection.
BlackRock’s top-rated target-date series is index-based and benefits from low costs. But the team overseeing the series has been exceptionally thoughtful, making forward-thinking changes that have improved outcomes for investors. Notably, the firm made a significant glide path change nearly a decade ago based on updated capital markets assumptions and studies into investor behavior. More recently, changes on the bond side should provide better diversification benefits.
The first of just two stock mutual funds on the list, BlackRock Technology Opportunities is managed by an industry veteran with more than 25 years of experience analyzing technology firms. Lead manager Tony Kim and his team target firms with cutting-edge technology and interesting business models, working with a data scientist to compare data across industries. They balance larger-cap core stocks with smaller, more opportunistic holdings, and will hold stocks that are technically outside of the tech sector, such as Amazon.com AMZN and Tesla TSLA.
The only iShares-branded fund on the list of Gold-rated BlackRock mutual funds, iShares S&P 500 Index is essentially the same portfolio as its ETF counterpart, just in a different wrapper.
Of course, focusing only on ETFs and mutual funds that earn a Gold rating may be too limiting for some investors. Those who’d like to consider iShares ETFs and BlackRock mutual funds beyond those featured here can:
Here’s a roundup of some recent Morningstar commentary about BlackRock as of March 2023:
A review of BlackRock’s top-rated target-date series, BlackRock Lifepath Index Target-Date Series.
Morningstar talks with BlackRock’s chief investment strategist about expectations for 2023 in 10 Questions for BlackRock’s Wei Li.
Morningstar strategist Greggory Warren reflects on BlackRock’s recent earnings report.
Morningstar director Bryan Armour; strategist Eric Jacobson; senior analysts R.J. D’Ancona, Megan Pacholok, and Stephen Welch; analyst Lan Anh Tran; and associate analysts Mo’ath Almahasneh and Zachary Evens contributed the individual ETF and fund research in this article.
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Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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