ETF Spotlight on iShares iBoxx $ Investment Grade Corporate Bond (LQD), part of a weekly series. Assets: $12 billion

Holdings

LQD has up to 100 holdings of highly liquid investment grade corporate bonds with an average bond rating of A and an average maturity of 12.27 years. Among its top components include Wells Fargo (WFC), American Express (AXP) and IBM (IBM).

Objective

This fund seeks to match the price and yield performance of the U.S. investment-grade corporate bond market by tracking the iShares iBoxx $ Investment Grade Index.

What You Should Know

• This fund has a low expense ratio of 0.15%
• With 100 holdings, this ETF and other bond ETFs give diverse exposure in a cost effective way
• Banks and financial services are the top sectors in the fund; it also contains oil and gas producters, tobacco, media and chemicals

The Latest News

• Corporate bond volumes have exploded worldwide this year, topping the $1 trillion mark
• Companies have been forced to seek other sources of funding because of a tight credit environment, report Sonja Cheung and Clare Connaghan for The Wall Street Journal
• The utility and energy sectors have contributed to the rise the most, issuing $188.4 billion so far this year
• 90% of these issuances have been investment-grade bonds

For full disclosure, Tom Lydon’s clients own shares of LQD.

Tags: Bond ETFs, Corporate Bonds, ETF 101, ETF Spotlight, LQD