This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Top 10 Corporate Bond ETFs

Stocks in this article: LQD CSJ CIU VCSH CFT VCIT SCPB


In an era of low interest rates and perhaps a good deal of distrust of equity markets, investing for income has become quite a challenge. There are many ETF sectors to choose from where yield is a prime consideration. With fixed income and bonds, the menu consists of the following: corporate, high yield, municipal, emerging market, government, international government, inflation-protected, mortgage-backed and preferred stock.

Many institutional investors (insurance companies and large pension plans) must have an allocation to bonds. Many asset allocation plans include bonds for individual investors. And, clearly savers and seniors especially gravitate to them for safety and income.

We'll be evaluating most of these issues and sectors beginning with corporate bonds. While we haven't included all that are available, we've sorted the top ten below by AUM (Assets under Management). It doesn't mean we favor one over another and perhaps newer issues might even have better features but haven't been seasoned enough to garner significant assets yet.

Corporate bond yields range from 2% to 4% overall. Investors should remember most corporate bond issues have call dates which would mandate early redemption at the option of the issuer. These can limit capital appreciation.

Corporate bond supply is quite plentiful given low yields. This has made it compelling for companies to take advantage low cost funding for many purposes including stock buy-backs and rebuilding balance sheets.

Typically most bond issues and sectors aren't highly correlated to stocks. This was especially true during the previous bear market. However, recently given unusual Fed policies combining ZIRP (Zero Interest Rate Policies) with QE (Quantitative Easing) these non-correlations have become less apparent. This may prove temporary.


LQD (iShares iBoxx Investment Grade Bond ETF) tracks the iBoxx Liquid Investment Grade Index comprising over 600 bond issues. The fund was launched in July 2002. AUM (Assets under Management) is $13 billion and daily trading volume averages just under 1M shares. Over 70% of constituent holdings have maturities between 3-10 years. This would be considered moderate and offers less duration risk.

As of mid-September 2011, the annual dividend is $.43 making the current yield 1.53% with YTD 4.05%.

Beware that over 50% of holdings are in the financial sector dominated by banks including those in Europe.

Data as of September 2011

Top Ten Holdings & Weightings

  1. AT&T 5.5%:  0.84%
  2. Wells Fargo & Co 5.625%: 0.79%
  3. Wal-Mart Stores 6.5%: 0.73%
  4. AT&T 6.55%: 0.71%
  5. JP Morgan Chase 6.3%: 0.71%
  6. Amer Intl Group Inc  5.85%: 0.69%
  7. Verizon  8.75%: 0.68%
  8. Citigroup 8.5%: 0.68%
  9. General Electric Cap Corp 5.625%: 0.68%
  10. Credit Suisse New York Branch 5.3%: 0.66%


1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs