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Low-Cost Exposure to Investment-Grade Corporate Bonds

Alex Bryan, CFA (alex.bryan@morningstar.com)

Broad investment-grade bond index funds sometimes get a bad rap for their bias toward Treasuries and agency mortgage-backed securities, which limits their yield. Investors can accomplish that more cheaply by buying an investment-grade corporate-bond index fund like  iShares iBoxx $ Investment Grade Corporate Bond ETF  LQD . There is a lot to like about this fund, from its durable cost advantage to its broadly diversified market-cap-weighted portfolio that approximates the composition of the U.S.-dollar investment-grade corporate-bond market.