ETF Spotlight: iShares iBoxx Investment Grade Corporate Bond

Aug.27.09 | About: iShares iBoxx (LQD)

ETF Spotlight on iShares iBoxx $ Investment Grade Corporate Bond (NYSEARCA:LQD), part of a weekly series. Assets: $12 billion

Holdings

LQD has up to 100 holdings of highly liquid investment grade corporate bonds with an average bond rating of A and an average maturity of 12.27 years. Among its top components include Wells Fargo (NYSE:WFC), American Express (NYSE:AXP) and IBM (NYSE:IBM).

Objective

This fund seeks to match the price and yield performance of the U.S. investment-grade corporate bond market by tracking the iShares iBoxx Investment Grade Index.

What You Should Know

  • This fund has a low expense ratio of 0.15%
  • With 100 holdings, this ETF and other bond ETFs give diverse exposure in a cost effective way
  • Banks and financial services are the top sectors in the fund; it also contains oil and gas producters, tobacco, media and chemicals

The Latest News

  • Corporate bond volumes have exploded worldwide this year, topping the $1 trillion mark
  • Companies have been forced to seek other sources of funding because of a tight credit environment, report Sonja Cheung and Clare Connaghan for The Wall Street Journal
  • The utility and energy sectors have contributed to the rise the most, issuing $188.4 billion so far this year
  • 90% of these issuances have been investment-grade bonds

For full disclosure, Tom Lydon’s clients own shares of LQD.