NEW YORK (TheStreet) -- Most ETF investors know that the first equity fund was the S&P 500 SPDR (SPY), which of course tracks a very broad index. Subsequent equity funds then got narrower to cover sectors, foreign countries, themes and possibly the ridiculous; there was a short-lived ophthalmology ETF from the now defunct Health Shares.
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.