On the other hand, investment-grade corporate bonds may be a decent play to capture quality debt with decent yields. For instance, the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) has a 2.85% 30-day SEC yield, Vanguard Intermediate-Term Corporate Bond ETF (NYSEArca: VCIT) has a 2.91% 30-day SEC yield, and SPDR Barclays Intermediate Term Corporate Bond ETF (NYSEArca: ITR) has a 2.16% 30-day SEC yield. [ETFs for a Deflationary Period]

Corporate bonds also have a greater correlation to U.S. companies or slightly greater volatility than U.S. Treasuries. However, Corporate America is sitting on huge cash stockpiles, which diminishes default risks.

“The last time an investment-grade rated company defaulted was 2011, and the average default rate since 1981 for investment-grade debt is 0.12%, according to S&P’s 2013 Annual U.S. Corporate Default Study and Rating Transitions publication,” writes Morningstar analyst Thomas Boccellari.

For more information on corporate debt, visit our corporate bonds category.

Max Chen contributed to this article. Tom Lydon’s clients own shares of HYG, JNK and LQD.

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