Potential investors should be aware that corporate bonds have historically exhibited grater volatility than U.S. Treasuries due to the increased volatility in corporate cash flows and credit risks, along with greater liquidity risks.
“The selloff has taken the yield on corporate bonds above 4% for the first time since 2011. Company debt was previously buoyed by ultraloose monetary policy,” according to the Wall Street Journal. “Now the Federal Reserve is raising interest rates and starting to wind down its balance sheet. This brings companies into greater competition for dollar funding, especially with short-dated U.S. Treasury yields now at a 10-year high. Previously there was little alternative for yield-seeking investors but to buy riskier debt.”
CSJ is an investment-grade fund as over 71 percent of the ETF’s holdings are rated A or BBB. The ETF charges just 0.06% per year, or $6 on a $10,000 investment.
For more information on the fixed-income market, visit our bond ETFs category.