Corporate Bond ETFs
Corporate bonds are at times an asset class that is underowned by income investors. This is because they either don’t take the time to research them or are simply unaware of the investment opportunity they present.
A bond investment provides a steady income and must be paid out before any dividend. A company could cut or eliminate its dividend at any time, whereas the same cannot happen to a corporate bond. This makes corporate bonds very useful for achieving your goals, whether it’s early retirement and/or generating an extra source of income.
That’s why the focus of this article will be investing in corporate bonds through an exchange-traded fund (ETF). This is a great investment strategy and is explained further below. Also featured is a list of corporate bond ETFs that trade in the U.S.
What is a Corporate Bond ETF?
A corporate bond ETF is an ETF that invests solely in bonds (debt securities) issues by large businesses. Like most ETFs, a corporate bond ETF adds greatly to a portfolio’s diversity. Holdings include corporations based both in the U.S. and around the world, with some even having exposure to government bonds as well. Most corporate bond ETFs pay an income to unitholders on either a monthly or quarterly basis.
With corporate bonds, the investors are lending the company money for a certain length of time period will receive income through an interest payment twice a year. The payment will end on the maturity date, which is determined prior to the bond being available for trading. A company will generally need the money for business expenses, new investment opportunities, or to strengthen its balance sheet.
The interest rate is based on the company’s credit rating tas determined by Moody’s Corporation (NYSE:MCO), Standard & Poor’s, and/or Fitch Group Inc. The credit rating is determined according to the company’s balance sheet, earnings strength, and business outlook, plus the likelihood of the interest and principal being paid back.
There are two major categories for bonds. Investment-grade bonds pay out a lower interest rate because they are considered high-quality bonds and are likely to return the principal investment at the maturity date. Their credit ratings are normally between AAA/Aaa and BBB-/Baa3. Non-investments bond (junk bonds) are corporate bonds with a credit rating of Ba1/BB+ or lower. As a result, a higher interest rate being paid to investors because they are taking on more risk. The greater risk comes from the higher probability of the company struggling to cover the interest payment and principal by the maturity date.
Features of Corporate Bond ETF Investing
The holding and investments for a corporate bond ETF would be grouped in different categories. However, no matter the holdings within an ETF, its features and benefits are all the same. Below is more details.
1. Professionally Managed
Professionals overlook all the investment decisions made for a corporate bond ETF. This would include things such as deploying capital, selling a position, generating an outlook for how the bond market will perform, and determining how much income to pay investors.
Before an ETF is available for trading, it creates what is known as a mandate–a set of rules that all investments need to follow and use. For instance, one rule could be to invest at least 90% of all the capital, meaning that no more than 10% of cash could be sitting in the accounts. This would also ensure that 90% of capital invested is generating an income.
This gives investors some insight as to what to expect from the investment before going in. The information is available via the issuer’s web site or your brokerage accounts in the research section.
2. Diversification
To invest in a corporate bond ETF is to invest into a portfolio of different bonds. This means you could simply purchase one ETF that contains 20, 50, or even hundreds of different bonds. The bonds that are held depend on the ETF’s investment strategy.
In some cases, there is an benchmark index issued. One reason to use this benchmark is to compare the returns of the corporate bond ETF, which gives insight on how the portfolio managers have performed in regards to their decisions. A benchmark index is also used in some cases with a ETF that tries to duplicate a holding and its excepted price movement and yield return.
Another situation may be where a ETF holds a certain percentage of holdings from the underlying index and the rest of the assets are invested using a different strategy. In this case, the portfolio managers are trying to generate a excess return when compared to the benchmark.
3. Lower Commission Costs
Purchasing a corporate bond ETF requires paying a small commission to the broker. No matter if you are purchasing 100 units of an ETF or 1,000, the same amount of commission would be paid.
Purchasing corporate individually works a bit differently, instead requiring a percentage of the trade amount as a payment. Therefore, the larger the trade in terms of dollar value, the more would be going into the broker’s pocket. Over the long term, it could result in a lower return.
4. Endless Opportunities
There are often many investment opportunities that an investor wants to own, but they either have the money deployed in another investment or don’t have enough capital to purchase all the investments they want. But with the diversification from the many holdings within a corporate bond ETF, this won’t be a problem.
Below is a list of the best corporate bond ETFs that trade in the U.S.
List of Corporate Bond ETFs
| ETF Symbol | ETF Name | ETF Issuer | Type of Bonds Held |
| VRP | PowerShares Variable Rate Preferred Portfolio | Invesco PowerShares | U.S. – Corporate Preferred Stock Floating Rate |
| BSCH | Guggenheim BulletShares 2017 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Ultra-Short Term |
| IBDJ | iShares iBonds Dec 2017 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Ultra-Short Term |
| BSJH | Guggenheim Bulletshares 2017 High Yield Corporate Bond ETF | Guggenheim | U.S. – Corporate High Yield Ultra-Short Term |
| SJNK | SPDR Bloomberg Barclays Short Term High Yield Bond ETF | State Street Global Advisors | U.S. – Corporate High Yield Short-Term |
| SHYG | iShares 0-5 Year High Yield Corporate Bond ETF | BlackRock | U.S. – Corporate High Yield Short-Term |
| HYS | PIMCO 0-5 Year High Yield Corporate Bond Index ETF | PIMCO | U.S. – Corporate High Yield Short-Term |
| BSJI | Guggenheim BulletShares 2018 High Yield Corporate Bond ETF | Guggenheim | U.S. – Corporate High Yield Short-Term |
| BSJJ | Guggenheim BulletShares 2019 High Yield Corporate Bond ETF | Guggenheim | U.S. – Corporate High Yield Short-Term |
| HYZD | WisdomTree Interest Rate Hedged High Yield Bond Fund | WisdomTree | U.S. – Corporate High Yield Short-Term |
| HYND | WisdomTree BofA Merrill Lynch High Yield Bond Negative Duration Fund | WisdomTree | U.S. – Corporate High Yield Short-Term |
| SFHY | WisdomTree Fundamental U.S. Short-Term High Yield Corporate Bond | WisdomTree | U.S. – Corporate High Yield Short-Term |
| BSJK | Guggenheim BulletShares 2020 High Yield Corporate Bond ETF | Guggenheim | U.S. – Corporate High Yield Intermediate |
| BSJL | Guggenheim BulletShares 2021 High Yield Corporate Bond ETF | Guggenheim | U.S. – Corporate High Yield Intermediate |
| BSJM | Guggenheim BulletShares 2022 High Yield Corporate Bond ETF | Guggenheim | U.S. – Corporate High Yield Intermediate |
| BSJN | Guggenheim BulletShares 2023 High Yield Corporate Bond ETF | Guggenheim | U.S. – Corporate High Yield Intermediate |
| BSJO | Guggenheim BulletShares 2024 High Yield Corporate Bond ETF | Guggenheim | U.S. – Corporate High Yield Intermediate |
| BKLN | PowerShares Senior Loan Portfolio | Invesco PowerShares | U.S. – Corporate High Yield Floating Rate |
| SNLN | Highland iBoxx Senior Loan ETF | Highland Capital Management | U.S. – Corporate High Yield Floating Rate |
| FLRT | AdvisorShares Pacific Asset Enhanced Floating Rate ETF | AdvisorShares | U.S. – Corporate High Yield Floating Rate |
| CMBS | iShares CMBS ETF | BlackRock | U.S. – Corporate Asset-backed |
| FCOR | Fidelity Corporate Bond ETF | Fidelity | U.S. – Corporate |
| CJNK | SPDR BofA Merrill Lynch Crossover Corporate Bond ETF | State Street Global Advisors | U.S. – Corporate |
| ICSH | iShares Ultra Short-Term Bond ETF | BlackRock | U.S. – Broad Market Investment Grade Ultra-Short Term |
| ULST | SPDR SSgA Ultra Short Term Bond ETF | State Street Global Advisors | U.S. – Broad Market Investment Grade Ultra-Short Term |
| MINT | PIMCO Enhanced Short Maturity Active ETF | PIMCO | U.S. – Broad Market Investment Grade Short-Term |
| NEAR | iShares Short Maturity Bond ETF | BlackRock | U.S. – Broad Market Investment Grade Short-Term |
| FLTB | Fidelity Limited Term Bond ETF | Fidelity | U.S. – Broad Market Investment Grade Short-Term |
| HOLD | AdvisorShares Sage Core Reserves ETF | AdvisorShares | U.S. – Broad Market Investment Grade Short-Term |
| ARCM | Arrow Reserve Capital Management ETF | Arrow Investment Advisors | U.S. – Broad Market Investment Grade Short-Term |
| NUSA | NuShares Enhanced Yield 1-5 Year U.S. Aggregate Bond ETF | Nuveen | U.S. – Broad Market Investment Grade Short-Term |
| FLOT | iShares Floating Rate Bond ETF | BlackRock | U.S. – Broad Market Investment Grade Floating Rate |
| FLRN | SPDR Bloomberg Barclays Investment Grade Floating Rate ETF | State Street Global Advisors | U.S. – Broad Market Investment Grade Floating Rate |
| VRIG | PowerShares Variable Rate Investment Grade Portfolio | Invesco PowerShares | U.S. – Broad Market Investment Grade Floating Rate |
| AGG | iShares Core U.S. Aggregate Bond ETF | BlackRock | U.S. – Broad Market Investment Grade |
| BND | Vanguard Total Bond Market ETF | Vanguard | U.S. – Broad Market Investment Grade |
| SCHZ | Schwab US Aggregate Bond ETF | Charles Schwab | U.S. – Broad Market Investment Grade |
| BNDS | SPDR Bloomberg Barclays Aggregate Bond ETF | State Street Global Advisors | U.S. – Broad Market Investment Grade |
| AGGY | WisdomTree Barclays Yield Enhanced U.S. Aggregate Bond Fund | WisdomTree | U.S. – Broad Market Investment Grade |
| AGGE | IQ Enhanced Core Bond U.S. ETF | IndexIQ | U.S. – Broad Market Investment Grade |
| NUAG | NuShares Enhanced Yield U.S. Aggregate Bond ETF | Nuveen | U.S. – Broad Market Investment Grade |
| AGZD | WisdomTree Barclays Interest Rate Hedged U.S. Aggregate Bond Fund | WisdomTree | U.S. – Broad Market Investment Grade |
| HQBD | Hartford Quality Bond ETF | Hartford | U.S. – Broad Market Investment Grade |
| AGND | WisdomTree Barclays Negative Duration U.S. Aggregate Bond Fund | WisdomTree | U.S. – Broad Market Investment Grade |
| BNDC | FlexShares Core Select Bond Fund | Northern Trust | U.S. – Broad Market Investment Grade |
| PGHY | PowerShares Global Short Term High Yield Bond Portfolio | Invesco PowerShares | U.S. – Broad Market High Yield Short-Term |
| VCSH | Vanguard Short-Term Corporate Bond ETF | Vanguard | U.S. – Corporate Investment Grade Short-Term |
| CSJ | iShares 1-3 Year Credit Bond ETF | BlackRock | U.S. – Corporate Investment Grade Short-Term |
| SCPB | SPDR Bloomberg Barclays Short Term Corporate Bond ETF | State Street Global Advisors | U.S. – Corporate Investment Grade Short-Term |
| BSCI | Guggenheim BulletShares 2018 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Short-Term |
| BSCJ | Guggenheim BulletShares 2019 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Short-Term |
| SLQD | iShares 0-5 Year Investment Grade Corporate Bond ETF | BlackRock | U.S. – Corporate Investment Grade Short-Term |
| IBDK | iShares iBonds Dec 2019 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Short-Term |
| IBDH | iShares iBonds Dec 2018 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Short-Term |
| IBDB | iShares iBonds Mar 2018 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Short-Term |
| IBCC | iShares iBonds Mar 2018 Term Corporate ex-Financials ETF | BlackRock | U.S. – Corporate Investment Grade Short-Term |
| LDRI | PowerShares LadderRite 0-5 Year Corporate Bond Portfolio | Invesco PowerShares | U.S. – Corporate Investment Grade Short-Term |
| SFIG | WisdomTree Fundamental U.S. Short-Term Corporate Bond | WisdomTree | U.S. – Corporate Investment Grade Short-Term |
| VCLT | Vanguard Long-Term Corporate Bond ETF | Vanguard | U.S. – Corporate Investment Grade Long-Term |
| CLY | iShares 10+ Year Credit Bond ETF | BlackRock | U.S. – Corporate Investment Grade Long-Term |
| IGHG | ProShares Investment Grade-Interest Rate Hedged | ProShares | U.S. – Corporate Investment Grade Long-Term |
| LWC | SPDR Bloomberg Barclays Long Term Corporate Bond ETF | State Street Global Advisors | U.S. – Corporate Investment Grade Long-Term |
| LKOR | FlexShares Credit-Scored US Long Corporate Bond Index Fund | Northern Trust | U.S. – Corporate Investment Grade Long-Term |
| CLYH | iShares Interest Rate Hedged 10+ Year Credit Bond ETF | BlackRock | U.S. – Corporate Investment Grade Long-Term |
| VCIT | Vanguard Intermediate-Term Corporate Bond ETF | Vanguard | U.S. – Corporate Investment Grade Intermediate |
| CIU | iShares Intermediate Credit Bond ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| ITR | SPDR Bloomberg Barclays Intermediate Term Corporate Bond ETF | State Street Global Advisors | U.S. – Corporate Investment Grade Intermediate |
| BSCK | Guggenheim BulletShares 2020 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Intermediate |
| BSCL | Guggenheim BulletShares 2021 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Intermediate |
| BSCM | Guggenheim BulletShares 2022 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Intermediate |
| IBDM | iShares iBonds Dec 2021 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| IBDL | iShares iBonds Dec 2020 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| IBDN | iShares iBonds Dec 2022 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| BSCN | Guggenheim BulletShares 2023 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Intermediate |
| IBDQ | iShares iBonds Dec 2025 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| BSCO | Guggenheim BulletShares 2024 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Intermediate |
| IBDO | iShares iBonds Dec 2023 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| IBDP | iShares iBonds Dec 2024 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| IBDC | iShares iBonds Mar 2020 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| IBCD | iShares iBonds Mar 2020 Term Corporate ex-Financials ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| IBDD | iShares iBonds Mar 2023 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| BSCP | Guggenheim BulletShares 2025 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Intermediate |
| IBCE | iShares iBonds Mar 2023 Term Corporate ex-Financials ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| PFIG | PowerShares Fundamental Investment Grade Corporate Bond ETF | Invesco PowerShares | U.S. – Corporate Investment Grade Intermediate |
| SKOR | FlexShares Credit-Scored US Corporate Bond Index Fund | Northern Trust | U.S. – Corporate Investment Grade Intermediate |
| BSCQ | Guggenheim BulletShares 2026 Corporate Bond ETF | Guggenheim | U.S. – Corporate Investment Grade Intermediate |
| IBDR | iShares iBonds Dec 2026 Term Corporate ETF | BlackRock | U.S. – Corporate Investment Grade Intermediate |
| FLTR | VanEck Vectors Investment Grade Floating Rate ETF | VanEck | U.S. – Corporate Investment Grade Floating Rate |
| LQD | iShares iBoxx $ Investment Grade Corporate Bond ETF | BlackRock | U.S. – Corporate Investment Grade |
| CRED | iShares U.S. Credit Bond ETF | BlackRock | U.S. – Corporate Investment Grade |
| CORP | PIMCO Investment Grade Corporate Bond Index ETF | PIMCO | U.S. – Corporate Investment Grade |
| QLTA | iShares Aaa-A Rated Corporate Bond ETF | BlackRock | U.S. – Corporate Investment Grade |
| LQDH | iShares Interest Rate Hedged Corporate Bond ETF | BlackRock | U.S. – Corporate Investment Grade |
| FLCO | Franklin Liberty Investment Grade Corporate ETF | Franklin ETF Trust | U.S. – Corporate Investment Grade |
| CBND | SPDR Bloomberg Barclays Issuer Scored Corporate Bond ETF | State Street Global Advisors | U.S. – Corporate Investment Grade |
| HCOR | Hartford Corporate Bond ETF | Hartford | U.S. – Corporate Investment Grade |
| COBO | ProShares USD Covered Bond | ProShares | U.S. – Corporate Investment Grade |
| WFIG | WisdomTree Fundamental U.S. Corporate Bond | WisdomTree | U.S. – Corporate Investment Grade |
| IGIH | Deutsche X-trackers Investment Grade Bond Interest Rate Hedged ETF | Deutsche Bank | U.S. – Corporate Investment Grade |
| HYG | iShares iBoxx $ High Yield Corporate Bond ETF | BlackRock | U.S. – Corporate High Yield |
| JNK | SPDR Bloomberg Barclays High Yield Bond ETF | State Street Global Advisors | U.S. – Corporate High Yield |
| PHB | Powershares Fundamental High Yield Corporate Bond Portfolio | Invesco PowerShares | U.S. – Corporate High Yield |
| ANGL | VanEck Vectors Fallen Angel High Yield Bond ETF | VanEck | U.S. – Corporate High Yield |
| HYGH | iShares Interest Rate Hedged High Yield Bond ETF | BlackRock | U.S. – Corporate High Yield |
| HYLB | Deutsche X-trackers USD High Yield Corporate Bond ETF | Deutsche Bank | U.S. – Corporate High Yield |
| HYLD | AdvisorShares Peritus High Yield ETF | AdvisorShares | U.S. – Corporate High Yield |
| HYHG | ProShares High Yield-Interest Rate Hedged ETF | ProShares | U.S. – Corporate High Yield |
| HYLV | IQ S&P High Yield Low Volatility Bond ETF | U.S. – Corporate High Yield | |
| JPHY | JPMorgan Disciplined High Yield ETF | JPMorgan | U.S. – Corporate High Yield |
| FALN | iShares Fallen Angels USD Bond ETF | BlackRock | U.S. – Corporate High Yield |
| HYIH | Deutsche X-trackers High Yield Corporate Bond – Interest Rate Hedged ETF | Deutsche Bank | U.S. – Corporate High Yield |
| HYXE | iShares iBoxx $ High Yield ex Oil & Gas Corporate Bond ETF | BlackRock | U.S. – Corporate High Yield |
| WFHY | WisdomTree Fundamental U.S. High Yield Corporate Bond Fund | WisdomTree | U.S. – Corporate High Yield |
| THHY | VanEck Vectors Treasury-Hedged High Yield Bond ETF | VanEck | U.S. – Corporate High Yield |
| ISTB | iShares Core 1-5 Year USD Bond ETF | BlackRock | U.S. – Broad Market Short-Term |
| FTSM | First Trust Enhanced Short Maturity ETF | First Trust | U.S. – Broad Market Short-Term |
| ILTB | iShares Core 10+ Year USD Bond ETF | BlackRock | U.S. – Broad Market Long-Term |
| VBND | Vident Core U.S. Bond Strategy ETF | Exchange Traded Concepts | U.S. – Broad Market Intermediate |
| IMTB | iShares Core 5-10 Year USD Bond ETF | BlackRock | U.S. – Broad Market Intermediate |
| IUSB | iShares Core Total USD Bond Market ETF | BlackRock | U.S. – Broad Market |
| AGGP | IQ Enhanced Core Plus Bond U.S. ETF | IndexIQ | U.S. – Broad Market |
| FIBR | iShares Edge U.S. Fixed Income Balanced Risk ETF | BlackRock | U.S. – Broad Market |
| BYLD | iShares Yield Optimized Bond ETF | BlackRock | U.S. – Broad Market |
| GMTB | Columbia Core Bond ETF | Columbia | U.S. – Broad Market |
| CWB | SPDR Bloomberg Barclays Convertible Securities ETF | State Street Global Advisors | U.S. – Convertibles |
| ICVT | iShares Convertible Bond ETF | BlackRock | U.S. – Convertibles |
Types of Corporate Bonds Held by ETFs
There is a lot of information provided in the corporate bond ETF list above, with the only unknown being the last category “type of bonds held.” These are explained below, which should help greatly with understanding corporate bond ETFs and knowing which are right for you based on the risk and return expectations of the ETF.
U.S. – Corporate Preferred Stock Floating Rate
This group of ETFs is more focused on owning preferred shares of companies. This would be a mix between a bond investment and owning the common shares. Preferred shares have a set interest rate, but the price is traded more like a stock. The rest of the portfolio’s assets are invested in corporate bonds. The focus is only bonds and preferred shares from U.S. corporations. Therefore by owning an ETF like this it will give you exposure to both corporate bonds and the preferred shares market.
U.S. – Corporate Investment Grade Ultra-Short Term
These are funds that own the highest-quality investment-grade bonds issued by U.S. corporations. These bonds have a high probability of returning the principal investments to investors and not misings an interest payment. The maturities range from one to three years.
U.S. – Corporate High Yield Ultra-Short Term
ETFs under this category offer high yields via non-investment-grade bonds (also known as junk bonds) that are issued by U.S. corporations. Only maturities three years or under are owned.
U.S. – Corporate High Yield Short-Term
This is the same investment philosophy as U.S. corporate high yield ultra short-term ETFs, except the bond maturities would be between zero and five years.
U.S. – Corporate High Yield Intermediate
ETFs that hold hold U.S. corporate high yield intermediate bonds offer–surprise!–a high yield. This would be due to the bonds being known as non-investment grade bonds. In order for a bond to be held within these funds it must have maturities of 10 years or less and must be issued by a U.S. company.
U.S. – Corporate High Yield Floating Rate
This group of ETFs is considered very unique investment opportunities for two reasons. One, you would be investing in senior debt issued by U.S. banks, with an opportunity for the interest rate to rise. Second, the return is based on the underlying benchmark interest rate, though sometimes it’s based on the London Interbank Offered Rate (LIBOR) or the interest rate set by the U.S. Federal Reserve.
U.S. – Corporate Asset-Backed
These are ETFs with holdings in U.S. corporate assets-based and based on mortgage securities. The securities are backed by a pool of commercial mortgage loans that generate an income. Only investment-grade debt securities loans from U.S. properties are held.
U.S. – Corporate
Any ETF that has holdings in the U.S. corporate bonds has its very own specific objective. For instance, some use options and derivatives to generate a surplus return based on the core investment. Other funds only make investments in bonds with a certain credit rating. I would highly recommend doing some more research before considering owning any of this type of ETFs (though this really goes for any ETF in general).
U.S. – Broad Market Investment Grade Ultra-Short Term
These ETFs own investment-grade bonds from around the world, including the U.S., with maturities of two years or less. The investments despite its variety, these ETFs tend to prefer U.S. companies that trade in the greenback.
U.S. – Broad Market Investment Grade Short-Term
This group of ETFs holds high-quality investment-grade bonds based on companies around the world with maturities of five years or less. The holdings would reflect more to U.S.-based companies. There is no currency risk involved, since only U.S.-dollar-denominated bonds are held.
U.S. – Broad Market Investment Grade Floating Rate
These ETFs only hold investment-grade debt, which is offered by the U.S. banks. Holdings include banks around the world that trade in the greenback. There is also the possibility of seeing the interest rate of the bonds hold interest as well.
U.S. – Broad Market Investment Grade
Corporate bond ETFs under this sub-group only hold investment-grade bonds. The holdings are issued by companies around the world but must be trading in the U.S. dollar. The maturities for this group of ETFs will differ, but most of them are greater than 10 years.
U.S. – Broad Market High Yield Short-Term
This group is similar to U.S. broad market investment grade ETFs. The only difference is that with these, the maturities of the bonds within are three years or less.
U.S. – Corporate Investment Grade Short-Term
ETFs under this group have maturities of three years or less. Only investment-grade bonds traded in the U.S. dollar are held.
U.S. – Corporate Investment Grade Long-Term
This group of ETFs is the same as above, with the exception of the maturities, which in this case are 10 years or more.
U.S. – Corporate Investment Grade Intermediate
Corporate investment grade intermediate ETFs hold bonds that have between five and 10 years left until they mature. Only high-quality bonds that are traded in the U.S. currency are held.
U.S. – Corporate Investment Grade Floating Rate
ETFs under this category are invested in high-quality investment-grade notes/bonds that offer the opportunity to generate a higher interest income as time passes. This increase is based on the underlying interest rate benchmark seeing a change in rates. Only U.S. corporations’ notes/bonds that use the greenback are owned.
U.S. – Corporate Investment Grade
With this group of ETFs, only investment-grade corporate bonds are held. The maturities differ from ETF to ETF, depending on the portfolio manager’s outlook and decisions. This investment will also be neutral on a currency basis because all bonds are accounted for in the U.S. dollar.
U.S. – Corporate High Yield
In this case, only non-investment-grade bonds would be held, with a range of maturities. There won’t be any currency risk involved because only U.S. denominated-bonds are involved.
U.S. – Broad Market Short-Term
The investment criteria for this group of ETFs are a maturity time period of three years or less and that they are trading in the U.S. dollar. Both government and corporate bonds are held within.
U.S. – Broad Market Long-Term
A U.S. broad market long-term ETF is one that is focused on government (both U.S. and elsewhere) investments, non-investment bonds, and cash investments. Only bonds that are traded in the U.S. greenback are owned and they must have a maturity of 10 years or more.
U.S. – Broad Market Intermediate
Holdings within this group of ETFs trade in the U.S. dollar and have maturities of between of five and 10 years. They all differ, with corporate bonds held in the U.S. and global corporate bonds and some in government bonds as well.
U.S. – Broad Market
These ETFs have a mixed portfolio while focusing on U.S. dollar-based bonds. This includes different maturity dates, investment- and non-investment-grade bonds, and government bonds. Each ETF will differ in terms of its weighting in each sub-category; for example, some ETFs hold more corporate bonds and have less exposure to government bonds.
U.S. – Convertibles
ETFs under this category hold both stocks and corporate bonds of U.S. based companies. They start with investing in convertible corporate bonds, with the company and investors having the choice of converting the bonds into the company’s common stock. The conversion ratio for bonds into common stock is determined before the bonds can be purchased. There is still income earned as interest from the bonds and a dividend from common shares, if the business pays one. For more information how these investments work, click here.