Home Trading ETFs Best Investment Grade Corporate Bond ETFs for Q1 2020

Best Investment Grade Corporate Bond ETFs for Q1 2020

by Staff Author
Best Investment Grade Corporate Bond ETFs for Q1 2020



Exchange-traded funds (ETFs) are not reserved solely for equities. There are also bond ETFs that invest exclusively in fixed-income securities. This universe includes investment grade corporate bond ETFs, which buy the high quality debt of financially strong and stable companies. Some examples include Microsoft Corp. (MSFT), AT&T Inc. (T), and JPMorgan Chase & Co. (JPM). These companies have high credit ratings that indicate a low risk of default. For this reason, these ETFs can provide a strong defensive addition to investment portfolios.

The investment grade corporate bond ETF universe is comprised of about 44 distinct ETFs, excluding inverse and leveraged ETFs. The best-performing investment grade corporate bond ETF for Q1 2020, based on performance over the past year, is the FlexShares Credit-Scored U.S. Long Corporate Bond Index Fund (LKOR). We examine the top 3 best investment grade corporate bond ETFs below. All numbers in this story are as of February 11, 2020.

  • Performance over 1-Year: 23.9%
  • Expense Ratio: 0.22%
  • Annual Dividend Yield: 3.53%
  • 3-Month Average Daily Volume: 2,981
  • Assets Under Management: $27.1 million
  • Inception Date: September 23, 2015
  • Issuing Company: FlexShares

LKOR is a bond ETF that invests in U.S. investment grade corporate bonds with durations greater than ten years. The fund’s top three holdings include the bonds of Verizon Communications Inc. (VZ), a multinational telecommunications conglomerate; Home Depot Inc. (HD), a home improvement retailer; and UnitedHealth Group Inc. (UNH), a healthcare company.

  • Performance over 1-Year: 23.8%
  • Expense Ratio: 0.07%
  • Annual Dividend Yield: 3.63%
  • 3-Month Average Daily Volume: 410,748
  • Assets Under Management: $728.0 million
  • Inception Date: March 10, 2009
  • Issuing Company: State Street SPDR

SPLB is a bond ETF that invests in U.S. investment grade corporate bonds with durations greater than ten years. The fund’s top three positions include a cash component, which accounts for 2.6% of assets; bonds of CVS Health Corp. (CVS), a healthcare company; and bonds of GE Capital International Funding Company Unlimited Co., the financial-services division of General Electric Co. (GE).

  • Performance over 1-Year: 23.2%
  • Expense Ratio: 0.05%
  • Annual Dividend Yield: 3.38%
  • 3-Month Average Daily Volume: 393,060
  • Assets Under Management: $4,413.9 million
  • Inception Date: November 23, 2009
  • Issuing Company: Vanguard

VCLT is a bond ETF that invests in U.S. investment grade corporate bonds with durations greater than ten years. The fund’s top three holdings include NSTAR Electric Co. (NSARO), an electric power distribution company; Virginia Electric and Power Co., a subsidiary of Dominion Energy Inc. (D); and Enterprise Products Operating LLC (EPD), a midstream oil and gas company.



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