LQD: Attractive After February's Rate Increase

Harry Mamaysky
352 Followers

Summary

  • Investment grade corporate bonds experience a large sell-off in February of 2023.
  • The LQD ETF has ample liquidity, which it has maintained through recent crisis episodes.
  • Corporate credit fundamentals are sound.
  • There are reasons to think that February's rate increase was overdone.
  • LQD appears attractive based on fundamental arguments and based on a quantitative return forecasting model.
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Dilok Klaisataporn

Price action and liquidity

The increase in Treasury yields in February of 2023 has had profound implications for investors' asset allocation decisions. As the next chart shows, the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEARCA:LQD), which holds

This article was written by

352 Followers
Harry Mamaysky is a professor at Columbia Business School and is the CIO of QuantStreet Capital. QuantStreet implements quantitative asset allocation solutions for its retail and institutional clients. All articles I publish are for educational purposes only and do not contain legal, tax, or investing advice. I recommend consulting with the appropriate professional before making legal, tax, or investing decisions.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of VCIT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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