US Corporate Bond ETFs Rise
With investors fleeing Turkish bonds in favor of higher yields with less credit risk, U.S. corporate bond-focused fixed-income ETFs are an option, such as the iShares Intermediate Credit Bond ETF (NASDAQ: CIU) and SPDR Blackstone/GSO Senior Loan Portfolio (NYSEArca: SRLN).
CIU seeks to track the investment results of the Bloomberg Barclays U.S. Intermediate Credit Bond Index. The ETF’s focus is on investment-grade corporate debt and sovereign, supranational, local authority and non-U.S. agency bonds that are U.S. dollar-denominated and have a remaining maturity of greater than one year and less than or equal to ten years.
In today’s current economic climate, SRLN is an attractive option with its floating rate component, particularly if the Federal Reserve remains hawkish on any forthcoming data that may signal the inclusion of more interest rate hikes starting in September. All assets under the fund are funneled into the Blackstone / GSO Senior Loan Portfolio, and SRLN’s main objective is to outperform a primary and secondary index–the Markit iBoxx USD Liquid Leveraged Loan Index and the S&P/LSTA U.S. Leveraged Loan 100 Index through its investment in senior loans.
SRLN seeks to construct a portfolio of loans that are less volatile than the general loan market. In order to maximize loan portfolio performance, SRLN adds or removes loans that it believes will cause the portfolio to outperform or underperform versus the primary and secondary indexes.
For more trends in fixed income, visit the Fixed Income Channel.