IGSB - IGIB Vs IGSB: Which One Is The Better Pick?

2024-05-07 07:32:32 ET

Summary

• The U.S. Federal Reserve plans to slow its quantitative tightening program, indicating a potential interest rate pivot. However, the interest rate environment remains uncertain.
• The iShares 1-5 Year Investment Grade Corporate Bond ETF has a shorter duration and lower credit quality risk compared to the iShares 5-10 Year Investment Grade Corporate Bond ETF.
• The market outlook suggests ongoing interest rate uncertainty, making IGSB a more suitable choice for reducing duration.
• Both ETFs have compelling dividend prospects, yet, IGSB ETF seems like a less cyclical income-generating investment opportunity.
• We prefer the iShares 1-5 Year Investment Grade Corporate Bond ETF over the iShares 5-10 Year Investment Grade Corporate Bond ETF.

The U.S. Federal Reserve made a critical announcement last week , communicating its plan to slow its quantitative tightening program from June. The announcement acts as a leading indicator, suggesting an interest rate pivot is near. However, the subsequent reaction in the bond market was mixed and matched, implying that investors don't quite know whether or not to buy into the Fed's narrative.

Two vehicles that might be influenced by the volatile bond yield environment are the iShares 5-10 Year Investment Grade Corporate Bond ETF (NASDAQ: IGIB ) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (NASDAQ: IGSB ) . We initially decided to cover the IGSB ETF as a follow-up to our coverage last year . However, we wanted to throw IGIB into the mix to extend the analysis. ...

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