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Top 10 Corporate Bond ETFs: Pros vs. Cons


The 6. iShares Barclays Credit Bond ETF (CFT) follows the Barclays Credit Bond Index, which includes dollar-denominated corporate and agency debt and has maturities greater than one year. In the top 10 holdings, you'll note a mix between dollar-denominated overseas issues and even a municipal bond issue. AUM is $862 million and average daily trading volume is roughly 54,000 shares. Nearly 75% of current maturities are within 10-years. The annual expense ratio is .20%.

Through May 2011 CFT has returned 2.98% with a yield of 4.42%.

CFT Top Ten Holdings

  1. European Investment Bank 5.125%: 0.52%
  2. Citigroup 8.5%: 0.35%
  3. General Electric Capital Corp 5.625%: 0.33%
  4. Morgan Stanley 4.75%: 0.31%
  5. Wyeth 5.5%: 0.31%
  6. Morgan Stanley 6%: 0.30%
  7. Bank of America Funding 4.5%: 0.30%
  8. European Investment Bank 2.75%: 0.28%
  9. California State GO Bonds 7.55%: 0.28%
  10. United Mexican States 5.95%: 0.28%

5. Vanguard Intermediate Term-Corporate Bond ETF (VCIT) tracks the Barclays Capital U.S. 5-10 Year Corporate Bond Index. AUM equals $518 million, while daily trading volume averages roughly 65,000 shares. Typical of Vanguard's fee structure is a .15% expense ratio.

Through May 2011, VCIT has returned 3.45%, with a yield of 4.17%.

VCIT Top Ten Holdings

  1. Morgan Stanley 5.45%: 1.60%
  2. Bank America Funding 5.65%: 1.47%
  3. US Treasury Note 2.625%: 1.26%
  4. Bear Stearns Cos 6.4%: 1.13%
  5. Wells Fargo & Co New 5.625%: 1.01%
  6. Bank America Charlotte 5.3%: 0.96%
  7. General Electric Capital Corp 5.625%: 0.94%
  8. Citigroup 6.125%: 0.87%
  9. American Express 7%: 0.84%
  10. AT&T 5.5%: 0.82%

4. SPDR Barclays Capital Short-Term Bond ETF (SCPB) follows the Barclays Capital U.S. 1-3 Year Corporate Bond Index. AUM equals $360 million, while average daily trading volume is around 94,000 shares. For investors not wishing to pay higher fees, SCPB has a low expense ratio of only .12%, which doesn't eat away too much of already-low yields.

Through May 2011, SCPB has returned 1.21% and has a current yield of 1.87%.

SCPB Top Ten Holdings

  1. Wells Fargo & Co New 5.25%: 1.55%
  2. General Electric Capital Corp 4.8%: 1.15%
  3. General Electric Capital Corp 6%: 1.03%
  4. JP Morgan Chase 5.375%: 1.01%
  5. Verizon Wireless Capital 7.375%: 0.99%
  6. CS First Boston New York Sr 5%: 0.93%
  7. Goldman Sachs Group 5.25%: 0.89%
  8. Morgan Stanley 2.875%: 0.88%
  9. Citigroup 6.5%: 0.86%
  10. Goldman Sachs Group 5.45%: 0.83%

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