We have spent a great deal of time in recent weeks speaking about U.S. Treasury related ETFs but today we switch focus to Corporate Bond products.
Specifically, SPDR Barclays Capital Short Term Corporate Bond (NYSEArca: SCPB) has accumulated significant asset flows in recent sessions, taking in more than $130 million which is equivalent to about 20% of the assets outstanding in the fund. [Corporate Bond ETFs Dominate Fixed-Income ETF Flows]
Trading near multi-year highs, the ETF invests in short term corporate bond issues (duration of 1-3 years) and follows the Barclays Capital U.S. 1-3 Year Corporate Bond Index.
Currently, top holdings in the fund are mostly debt from financial companies, and the observer will note some of the outstanding debt issues are from companies that have since merged with others.
Top weightings include bonds from Bank of America, Citigroup, Bear Stearns and Company, Wachovia, and General Electric and there are 767 separate holdings in the fund, giving it quite a bit of diversification.
Current yield is listed as 4.31% and investors may simply be looking for higher yield potential than longer dated U.S. Treasuries, which have been mired in the 2% range for quite some time, and are willing to accept company specific risk that is associated with corporate bond issues as a trade-off.
Other ETFs that are in the short term corporate bond space include iShares Barclays Capital U.S. 1-3 Year Credit Bond Index (NYSEArca: CSJ), although CSJ also owns non-corporate issues such as sovereign, supranational, and agency bonds, and Vanguard Short Term Corporate Bond (NYSEArca: VCSH).
These all have seen greater than average trading activity recently as well. Year to date, VCSH has rallied 1.59%, SCPB is up 1.30%, and CSJ is up 0.60%.
SPDR Barclays Capital Short Term Corporate Bond