In today’s market, investment grade corporate bond ETFs can be a safe bet to secure fixed income stability and hedge against investments with higher risk. The best performing ETFs in this class are seeing performance above 11% YTD.
The advantages of corporate bonds, according to Mercer, are:
- They have higher growth potential than government bonds.
- They are less vulnerable to inflation and interest rate increases than government bonds due to generally shorter periods to redemption.
- They are a very useful diversifier for low-medium, medium and medium-high risk portfolios.
- They are less risky than equities or property.
Corporate bond ETFs can help eliminate the challenges amateur investors can face selecting institutional bonds. They are also generally less expensive more liquid.
Here are the top 5 performing investment grade ETFs year-to-date as of June 4, 2019, according to XTF.com data.
1. iShares 10+ Year Investment Grade Corporate Bond ETF (LLQD) | 11.91% YTD
LLQD tracks the Markit iBoxx USD Liquid Investment Grade Long Index, an index composed of U.S. dollar-denominated, investment grade corporate bonds with remaining maturities greater than 10 years. Launched in September 2017, the fund has an expense ratio of 0.06% and $9.7 million in net assets.
2. Vanguard Long-Term Corporate Bond ETF (VCLT) | 11.29% YTD
VCLT tracks the Bloomberg Barclays U.S. 10+ Year Corporate Index. The fund follows a passively managed, index sampling approach and provides current income with high credit quality, according to the fund’s fact sheet. VCLT has an expense ratio of 0.07% and fund total net assets of $4.078 billion.
3. SPDR Portfolio Long Term Corporate Bond ETF (SPLB) | 11.05% YTD
SPLB follows the Bloomberg Barclays Long U.S. Corporate Index. The fund is billed as a suite of portfolio building blocks designed to provide broad, diversified exposure to core asset classes, according to the fund’s fact sheet. SPLB has a net expense ratio of 0.07% and initially debuted in 2009. It has $574 million AUM.
4. iShares Long Term Corporate Bond ETF (IGLB) | 10.96% YTD
IGLB tracks the ICE BofAML 10+ Year US Corporate Index. The index includes U.S. dollar-denominated investment-grade corporate bonds with remaining maturities greater than 10 years. The fund has an expense ratio of .06% and $987.42 million AUM.
5. Investco BulletShares 2028 Corporate Bond ETF (BSCS) | 8.99% YTD
The Investco BulletShares 2028 Corporate Bond ETF is based on the Nasdaq Bulletshares USD. The fund invests 80% of its assets in bonds that make up the index, which measures the performance of a portfolio of U.S. dollar-denominated, investment grade corporate bonds with effective maturities in 2028. The fund has a total expense ratio of .10% and debuted in 2018. It has $22.06 million AUM.
Check out more articles about investment grade ETFs.