Corporate Bond Exposure on the Cheap

Related: A Highly Liquid, High-Yield Bond ETF Option

VCIT has an average duration of 6.4 years and an average effective maturity of 7.5 years. The ETF’s yield to maturity is 3.8 years. VCIT charges just 0.07% per year, or $7 on a $10,000 investment, making it cheaper than 91% of competing strategies.

“The strategy’s three- and five-year annualized returns of 2.2% and 2.8% were behind the category average. This underperformance was driven principally by the portfolio’s relatively conservative construction that excludes below-investment-grade bonds. Its risk-adjusted returns, measured by Sharpe ratio, were in line with the category average over the same periods thanks to its significant cost advantage,” according to Morningstar.

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