LQD offers a 30-day SEC yield and comes with a 0.15% expense ratio. The bond ETF has a 7.93 year effective duration. The duration is a measure of the bond’s price sensitivity toward shifts in interest rates – bond prices and interest rates have an inverse relationship, so a higher interest rate translates to a lower bond price.
Looking at the fund’s credit quality, LQD is largely comprised of investment grade bonds AA 15%, A 53% and BBB 28%.
Another intermediate-term corporate debt ETF includes the iShares Barclays Credit Bond Fund (NYSEArca: CFT), which has a 2.36% 30-day SEC yield, a 0.20% expense ratio and a 6.67 years effective duration. CFT’s credit quality allocations include AAA 8.5%, AA 13%, A 43% and BBB 32%.
The Vanguard Intermediate-Term Corporate Bond ETF (NYSEArca: VCIT) has a 0.12% expense ratio, a 6.5 years average duration and a 2.57% 30-day SEC yield. Credit qualities include Aaa 1.1%, Aa 6.7%, A 45.8% and Baa 46.3%.
Additionally, the PIMCO Investment Grade Corporate Bond Index ETF (NYSEArca: CORP) comes with a 2.46% 30-day SEC yield, an effective duration of 6.54 years and a 0.20% 30-day SEC yield. CORP’s credit breakdown includes AAA 1.0%, AA 11%, A 40% and BBB 38%.
For more information on corporate bonds, visit our corporate bonds category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own HYG and LQD.