Best Fixed-Income ETFs to Have During a Recession – Part 2
This article was originally published on ETFTrends.com.
In ETF Trends' Part 1 of looking at the best fixed-income ETFs to have during a recession, four ETFs were introduced that underscored the need to have shorter terms if possible and investment-grade holdings to reduce credit risk exposure during tumultuous times when companies have a higher risk of default.
While safe havens, such as government and municipal bonds may be deemed as less riskier than corporate bonds during a recession, an investor does not have to abstain from them completely to still extract the benefits of higher-yielding debt issues.
As such, here are four more ETFs that can be used during a recessionary economic climate.
SPDR Portfolio Short Term Corp Bd ETF (SPSB)
SPSB seeks to provide investment results that correspond to the performance of the Bloomberg Barclays U.S. 1-3 Year Corporate Bond Index. SPSB invests at least 80 percent of its total assets in securities designed to measure the performance of the short-termed U.S. corporate bond market. Ideally, shorter-term bond issues with maturities of three to four years are ideal to minimize credit risk exposure in a recession.
Vanguard Interm-Term Corp Bd ETF (VCIT)
VCIT seeks to track the performance of a market-weighted corporate bond index with an intermediate-term dollar-weighted average maturity, namely the Bloomberg Barclays U.S. 5-10 Year Corporate Bond Index. While VCIT holds debt issues with maturities between 5 and 10 years, they are all investment-grade holdings to minimize default risk.
iShares Intermediate Credit Bond ETF (CIU)
CIU seeks to track the investment results of the Bloomberg Barclays U.S. Intermediate Credit Bond Index. The ETF's focus is on 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 ten years.
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 during times of a recession.
For more trends in the fixed-income space, visit our Fixed Income Channel.
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