If you’re suffering the low yields of Treasury bonds, there’s no need. Corporate bond exchange traded funds (ETFs) are kicking off juicy yields amid an increasingly stabilizing environment.
Corporate America appears to be righting itself after a months-long swoon. Among the signs that the worst of the downturn may be behind us: default rates among corporate bonds are falling, earnings have been decent and companies are issuing debt at record levels, reports Ben Baden for U.S. News & World Report. [Why Investors May Want Some Junk In Their Portfolios.]
Another selling point for corporate bonds is the threat of rising interest rates. While long-dated Treasuries will get hit when the Fed raises rates, while corporate debt won’t feel the same negative ipact. [How to Build a Bond ETF Portfolio.]
Instead of sticking with a low-yielding fund that’s heavy on an asset class like treasuries, consider an ETF like the iShares iBoxx $ Investment Grade Corporate Bond (NYSEArca: LQD), which currently yields 4.9%. The fund covers the medium-term investment-grade corporate bond universe.