“LQD has an effective duration of 8.34 years alongside a 30-day SEC yield of 3.18%. This may seem like a relatively modest income stream, but when compared against the 1.59% yield of the iShares 7-10 Year Treasury ETF (IEF), it actually stands out quite noticeably,” according to See It Market. “When examining the underlying drivers of risk and return in LQD, this ETF is certainly going to be influenced more by interest rate sensitivity than credit factors. While the credit environment is always going to be a moderate risk, the higher credit ratings of the underlying issuers help mitigate those concerns versus a basket of high yield (or junk) bonds.”
LQD is the largest investment-grade corporate bond ETF.
Due to the growing popularity and vast liquidity of corporate bond-related ETFs, more investors have turned to ETFs as a way to play the corporate debt market as opposed to trading less liquid individual debt securities.
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iShares iBoxx $ Investment Grade Corporate Bond ETF
Tom Lydon’s clients own shares of LQD.