Another point to consider is that simply because a company has taken on a lot of corporate debt, that does not mean the borrower will be strained to service that debt.
“If an issuer has a high level of debt, it doesn’t mean it cannot pay that debt, nor does it mean the company—or the fixed income ETF exposure—is at risk.” said SSgA. “Firms with a high amount of debt typically also have large asset bases and revenue profiles. If they didn’t, it’s unlikely the market would extend debt financing to these firms.”
CBND charges just 0.06% per year, or $6 on a $10,000 investment, making it one of the most cost-effective corporate bond strategies on the market.
For more information on the fixed-income market, visit our bond ETFs category.