Top 10 Corporate Bond ETFs

#1: iShares iBoxx Investment Grade Bond ETF (LQD)

 

LQD tracks the iBoxx Liquid Investment Grade Index comprising over 600 bond issues. The fund was launched in July 2002. The expense ratio is .15%. AUM (Assets under Management) equal $17 billion and daily trading volume averages 1.5M shares. Over 70% of constituent holdings have maturities between 3-10 years and 35% are within the financial sector. This would be considered moderate and offers less duration risk.  As of mid-January 2012 the annual dividend yield was 3.91% with YTD .66%. One year return was 9.44%.

Data as of First Quarter 2012

LQD Top Ten Holdings & Weightings

1. At&T 5.5%: 0.70%
2. At&T 6.55%: 0.68%
3. Wells Fargo & Co New 5.625%: 0.67%
4. Wal Mart Stores 6.5%: 0.67%
5. JP Morgan Chase 6.3%: 0.58%
6. Verizon  8.75%: 0.58%
7. Comcast Corp New 6.95%: 0.57%
8. Credit Suisse New York Branch 5.3%: 0.57%
9. General Electric 5.625%: 0.56%
10. Citigroup 8.5%: 0.55%

#2: iShares 1-3 Year Credit Bond ETF (CSJ)

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 clearly virtually eliminating duration risk. Bonds within the holdings are all investment grade. The fund was launched in January 2007. The expense ratio is .20%. AUM is over $9 billion and trading volume averages over 700K shares daily.  As of mid-January 2012 the annual dividend yield was 1.62% and YTD return .12%. The one year return was 1.88%.

Data as of First Quarter 2012

CSJ Top Ten Holdings & Weightings

1. European Investment Bank 1.5%: 0.94%
2. Intl Ban For Recon & 1.125%: 0.83%
3. Kreditanstalt Fur Wiederaufbau 1.875%: 0.79%
4. European Investment Bank: 0.77%
5. Citigroup 6.5%: 0.76%
6. Kreditanstalt Fur Wiederaufbau 2.75%: 0.73%
7. Intl Bk For Recon & 1.75%: 0.72%
8. Kreditanstalt Fur Wiederaufbau 1.375%: 0.72%
9. General Elec 5%: 0.71%
10. Asian Dev Bk: 0.70%

(NOTE: With recent European sovereign downgrades this pie chart could change soon.)

#3: iShares Barclays Intermediate Bond ETF (CIU)

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. The fund was launched in January 2007. The expense ratio is .20%. AUM equal $4.5 billion with average daily trading volume 346K shares. As of mid-January the annual dividend yield was 2.74% and YTD return .11%. The 1 year return was 5.19%.

Data as of First Quarter 2012

CIU Top Ten Holdings & Weightings

1. European Investment Bank 1.25%: 0.50%
2. European Investment Bank 4.625%: 0.47%
3. Kreditanstalt Fur Wiederaufbau 1.375%: 0.41%
4. Intl Bank For Recon & 2.125%: 0.34%
5. Kreditanstalt Fur Wiederaufbau 4.375%: 0.34%
6. Ontario Prov Canada 2.3%: 0.33%
7. Cisco Sys 5.5%: 0.31%
8. JP Morgan Chase 6%: 0.31%
9. Italy Rep 4.5%: 0.30%
10. European Investment Bank: 0.28%

(NOTE: Recent sovereign downgrades in European debt will negatively affect credit quality going forward.)

 

#4: Vanguard Short-term Corporate Bond ETF (VCSH)

VCSH 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 shorter term investment horizon and with interest rates this low, fees would matter. The fund was launched in November 2009. The expense ratio is .15% versus .20% for other similar products with yields already low making some difference. AUM equal $2.3 billion and average daily trading volume is 366K shares. As of mid-January 2012 the annual dividend was 2.30% and YTD return .24%. The one year return was 2.79%.

Data as of First Quarter 2012

VCSH Top Ten Holdings & Weightings

1. General Electric 5.45%: 1.05%
2. Wells Fargo & Co  4.375%: 0.90%
3. JP Morgan Chase 3.7%: 0.88%
4. General Electric 1.875%: 0.83%
5. Bank of America 4.9%: 0.78%
6. Citigroup 5.5%: 0.77%
7. Wells Fargo Co  3.75%: 0.76%
8. US Treasury Note 1%: 0.70%
9. Goldman Sachs  3.7%: 0.67%
10. Verizon Wireless Cap 5.55%: 0.62%

 

#5: iShares Barclays Credit Bond ETF (CFT)

 

CFT follows the Barclays Credit Bond Index which includes dollar denominated corporate and agency debt and have maturities greater than one year. In the top ten holdings you'll note a mix between dollar denominated overseas issues and even a municipal bond issue. The fund was launched in January 2007.The annual expense ratio is .20%. AUM equal $1.1 billion and average daily trading volume is roughly 155K shares. Nearly 75% of current maturities are within 10-years. As of mid-January 2012 the annual yield is 3.27% and YTD return .43%. The one year return was 8.98%.

Data as of First Quarter 2012

CFT Top Ten Holdings & Weightings

1. European Investment Bank 1.5%: 0.44%
2. European Investment Bank: 0.42%
3. JP Morgan Chase 3.45%: 0.39%
4. Amgen 5.85%: 0.35%
5. Intl Bank For Recon & 1%: 0.34%
6. BHP Billiton Fin Usa 6.5%: 0.26%
7. Goldman Sachs Grp 3.625%: 0.25%
8. Bank of America 5%: 0.24%
9. International American Dev Bank 3.875%: 0.23%
10. General Electric 5.875%: 0.22%

 

(NOTE: Recent sovereign downgrades in European debt will negatively affect credit quality going forward.)

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