This article was originally published on ETFTrends.com.
As summer draws to a close, it's that time again for students to head back into the classrooms and hit the books. For fixed-income investors, it's business as usual as the quest for profitability in the bond markets is akin to a vacationless, year-round curriculum.
Fortunately, there are no exam requirements for investors to make the grade--investment-grade, that is, when it comes to looking for fixed-income options to help hedge credit risk with investment-grade bond ETFs. As such, here are five fixed-income ETFs that are top of the class.
1. iShares 1-3 Year Credit Bond ETF (CSJ)
CSJ tracks the investment results of the Bloomberg Barclays U.S. 1-3 Year Credit Bond Index where 90 percent of its assets will be allocated towards a mix of investment-grade corporate debt and sovereign, supranational, local authority, and non-U.S. agency bonds that are U.S. dollar-denominated and have a remaining maturity of greater than one year and less than or equal to three years--this shorter duration is beneficial during recessionary environments.
2. ProShares Investment Grade—Intr Rt Hdgd (IGHG)
IGHG tracks the performance of the Citi Corporate Investment Grade (Treasury Rate-Hedged) Index with long positions in investment grade corporate bonds issued by both U.S. and foreign domiciled companies. This is particularly important during market downturns when the propensity for a company to default on its debt is higher. As such, IGHG focuses on investment-grade issues to reduce credit risk.
3. Xtrackers Inv Grd Bd Intst Rt Hdg ETF (IGIH)
IGIH seeks investment results that track the performance of the Solactive Investment Grade Bond - Interest Rate Hedged Index where a portion IGIH's total assets will reside in long positions in U.S. dollar-denominated investment-grade corporate bonds. As in the case of IGHG, this strategy effectively eliminates exposure to riskier bonds with fund allocations in investment-grade issues.
4. SPDR Blmbg Barclays Inv Grd Flt Rt ETF (FLRN)
FLRN seeks to provide investment results that mimic the performance of the Bloomberg Barclays U.S. Dollar Floating Rate Note < 5 Years Index. At least 80 percent of assets will go towards securities that include U.S. dollar-denominated, investment grade floating rate notes. This floating rate component can take advantage of short-term rate adjustments by the Federal Reserve, while at the same time, protect the investor against credit risk with investment-grade issues and a duration of less than five years.
5. iShares iBoxx $ Invmt Grade Corp Bd ETF (LQD)
LQD seeks to track the investment results of the Markit iBoxx® USD Liquid Investment Grade Index composed of U.S. dollar-denominated, investment-grade corporate bonds. LQD allocates 95 percent of its total assets in investment-grade corporate bonds to mitigate credit risk.
For more trends in fixed income, visit the Fixed Income Channel.
POPULAR ARTICLES FROM ETFTRENDS.COM
- Ex-Google Exec on Elon Musk’s Strengths and Flaws
- What’s New With the Home Office Tax Deduction
- 11 Financial Questions with Uncommon Answers
- 20 Most Desirable Cities in America … Should You Be a Buyer?
- How to Best Use an HSA to Your Benefit