Over the past month, the non-hedged iShares iBoxx $ Investment Grade Corporate Bond ETF (NYESArca: LQD) declined 1.5%, whereas IGIH dipped 0.5% and IGHG was 0.6% lower.
Nevertheless, potential investors should be aware that these types of zero-duration, hedged bond ETFs may underperform a non-hedged version if rates decline.
Looking further out, these types of hedged-bond ETFs could provide suitable exposure to the fixed-income market in a rising interest environment, especially as the Federal Reserve plans on hiking rates sometime later this year.
“The odds of a rate increase in September are increasing,’’ Mike Lorizio, senior fixed income trader at Manulife Asset Management, said in the WSJ article.
For more information on the fixed-income market, visit our bond ETFs category.
Max Chen contributed to this article.