Bond ETFs Offer Big Yields, Pullback Protection (TIP, AGG, LQD, CSJ)
Professional money managers often put their capital to work in variety of asset classes, ranging from equity and real estate to corporate debt and commodities. Thanks to the proliferation of exchange-traded funds (ETFs), retail investors can now do the same, and nothing more than a standard equity brokerage account is required. Within the broad universe of ETFs, those focused on fixed-income are among the least exciting because of their relatively low volatility; however, they can play an important role in diversification and asset protection.
Despite having ample resources to invest directly across asset classes, a number of Pros are now opting to use bond ETFs to gain exposure to various types of corporate and municipal debt. A look at the Bond ETFs Index shows that iShares Barclays Tips Bond Fund (TIP), iShares Barclays Aggregate Bond Fund (AGG), iShares Iboxx $ Investop Investment Grade Corporate Bond Fund (LQD), and iShares Barclays 1-3 Year Credit Bond Fund (CSJ) were all among Pro favorites based on aggregate holdings in the top-15 U.S.-listed equity positions of 13F-filing asset managers at the end of the second quarter.
As a whole, the Index has lagged the S&P 500 by -5% over the last month, but a look at the the performance chart shows that bond ETFs were largely immune to the sharp equity decline in the in 2008. As of this writing, the Index is ranked among the top-25 tickerspy Indexes by dividend yield with components dishing out an average 3.3% annually based on current prices and distributions over the last year.
Investors can track the Bond ETFs Index for performance trends and a suite of other metrics at tickerspy.com.
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