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Top 10 Corporate Bond ETFs: Pros vs. Cons

9. iShares 1-3 Year Credit Bond ETF (CSJ) tracks the Barclays Capital U.S. 1-3 year Credit Bond Index, which includes corporate and sovereign debt and non-U.S. agency bonds. The bonds held are shorter-term in duration, virtually eliminating duration risk. Bonds within the holdings are all investment grade. AUM is more than $8 billion and trading volume averages more than 475,000 shares daily.

YTD market return through May 2011 has been 1.18%, while the yield is roughly 2.29%.

CSJ Top Ten Holdings (Interest, Weighting)

  1. Kreditanstalt Fur Wiederaufbau 1.875%: 0.90%
  2. Citigroup 6.5%: 0.90%
  3. European Investment Bank 1.625%: 0.87%
  4. General Electric 5%: 0.81%
  5. International Bank For Reconstruction 1.75%: 0.80%
  6. Kreditanstalt Fur Wiederaufbau 1.375%: 0.80%
  7. Kreditanstalt Fur Wiederaufbau 3.5%: 0.72%
  8. European Investment Bank 1.25%: 0.71%
  9. CS First Boston New York 5%: 0.62%
  10. Kreditanstalt Fur Wiederaufbau 1.375%: 0.62%

8. iShares Barclays Intermediate Bond ETF (CIU) follows the Barclays Intermediate Credit Bond Fund Profile, which consists of investment grade bonds with maturities of greater than one year but less than 10 years. CIU has AUM of roughly $3.4 billion with average daily trading volume of just less than 200,000 shares.

CIU has a yield of approximately 4% and has returned 2.55% through May 2011.

CIU Top Ten Holdings

  1. European Investment Bank 4.625%: 0.67%
  2. International Bank For Reconstruction 2.125%: 0.47%
  3. Kreditanstalt Fur Wiederaufbau 4.375%: 0.47%
  4. Cisco Systems 5.5%: 0.46%
  5. Italy Republic 4.5%: 0.45%
  6. European Investment Bank 2.75%: 0.38%
  7. General Electric Capital Corp 2.8%: 0.38%
  8. Citigroup 5.5%: 0.35%
  9. AT&T 2.5%: 0.33%
  10. International Bank For Reconstruction 2.375%: 0.33%

7. Vanguard Short-term Corporate Bond ETF (VCSH - Get Report) also tracks the Barclays Capital U.S. 1-5 Year Corporate Index, which includes U.S. dollar-denominated, investment-grade securities. Vanguard, in general, would like to compete with similar offerings based on lower fees. And, if you're an investor with a long-term investment horizon and with interest rates this low, fees could matter. VCSH's expense ratio of .15%, versus .20% for other similar products, is possibly more appealing. AUM equals $1.5 billion and average daily trading volume is roughly 160,000 shares.

Through May 2011 YTD return has been 1.79% with a yield of 2.33%.

VCSH Top Ten Holdings

  1. General Electric Capital Corp 5.45%: 1.77%
  2. Wells Fargo Corp 3.75%: 1.11%
  3. Morgan Stanley 5.3%: 0.91%
  4. Goldman Sachs Group 3.625%: 0.90%
  5. CS First Boston New York 5%: 0.89%
  6. Citigroup 5.5%: 0.77%
  7. Goldman Sachs Group 5.25%: 0.73%
  8. Bank Of America Corp 6.25%: 0.70%
  9. AT&T 4.95%: 0.68%
  10. JP Morgan Chase 4.75%: 0.66%

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