iShares Barclays 1-3 Year Credit Bond ETF (NYSEARCA:CSJ) is yielding 1.74%, which isn't bad for 1-3 year paper, but the portfolio concerns me. Zerohedge picked up on weakness in EIB paper over the weekend. EXPT got downgraded today and bonds are being hit hard. I suspect Norway will step up and buy bonds, but 5-year bonds are down 30 points.
CSJ, in my opinion, is too weighted towards non corporates. Supranationals represent 11.6% of the portfolio (EIB, WB, IBRD, etc.). Agencies make up another 8.2% of the portfolio (KFW, Svensk Exportkredit, KDB, Eksportfinans, etc.). And financials make up 27% of the portfolio.
I just don't see that as a good way to earn an extra 1.5% per-annum right now. Too much going on in the world, and financials and supranationals, are at the heart of it.
I believe CSJ is just tracking its index. It is just, in my opinion, a bad index to track. 3-year corporates would be much nicer, though I suspect the yield would be smaller as financials in particular give this fund the yield.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.