This Day On The Street
Continue to site
ADVERTISEMENT
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

Bond ETFs Grow More Specialized

The most interesting of the three sector ETFs is the iShares Industrial Sector Bond Fund (ENGN). Its duration is 7.08 years and shows an SEC yield of 2.87%. The average credit rating is BBB+. Despite the theme of the fund of being industrial, it is more of an ex-financials corporate bond fund with companies like AT&T (T), Pepsico (PEP) and Oracle (ORCL) alongside names like Caterpillar (CAT) and Dow Chemical (DOW).

If rates do rise, these funds should not drop in price anywhere near as much as TLT, but they will look very volatile when compared to a very short maturity fund like iShares Barclays 1-3 Year Treasury Bond Fund (SHY).

As these are new funds, investors should prepare for the possibility that dividend payments will be uneven as there will likely be a swift increase in assets under management. The significance here is that today a fund may collect interest on $1 million face value of a bond, but a week from now it might have to pay out that interest to twice the number of shares, making the actual payout look unattractive.

10 Best-Performing 'Dividend Aristocrats' >>

As with foreign bond ETFs, hopefully sector fund become a popular option leading to more choices. Too many funds are very heavy in bonds from financial companies and any exposure available for people who would rather not buy individual bond issues would be welcome, as an excellent way to reduce credit risk.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
SYM TRADE IT LAST %CHG
AMPS $52.87 -0.04%
ENGN $50.90 -0.52%
MONY $55.16 3.09%
TSLA $233.85 0.99%
YHOO $44.29 -0.16%

Markets

DOW 18,009.08 -28.89 -0.16%
S&P 500 2,102.20 -6.72 -0.32%
NASDAQ 5,035.03 -25.2160 -0.50%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs