Active traders can profit from departures from investment-grade corporates with the obscure ProShares Short Investment Grade Corporate (NYSEArca: IGS). IGS seeks to deliver a performance that “correspond(s) to the inverse (-1x) of the daily performance of the Markit iBoxx $ Liquid Investment Grade Index,” according to ProShares. That is the same index tracked by LQD.
While IGS is not the most heavily traded bond ETF on the market (average daily volume of just 1,600 shares), the fund has a done a good job of accomplishing its objective since early May. With LQD down 4.3% since May 1, IGS has gained 4.5% over the same time. Currently trading around $32.30, IGS resides at its highest levels since February, indicating that this could be a good short-term play on outflows from high-grade corporate bond ETFs.
ProShares Short Investment Grade Corporate
ETF Trends editorial team contributed to this report. Tom Lydon’s clients own shares of LQD.