LQDH - LQDH: Investment-Grade Bond ETF Interest Rate Hedged Good 6.6% Yield
2024-05-29 03:06:07 ET
Summary
- LQDH is an interest rate hedged investment-grade corporate bond index ETF managed by BlackRock.
- It provides investors with diversified exposure to investment-grade corporate bonds, and uses swaps to hedge its interest rate risk.
- It has significantly outperformed its peers since inception, and with lower risk and volatility.
Most bond ETFs focus on fixed-rate bonds, and so have some rate risk. Investment-grade bond ETFs tend to have significant rate risk, as investment-grade corporations issued tons of long-term debt in prior years when rates were lower.
The iShares Interest Rate Hedged Corporate Bond ETF ( LQDH ) uses interest rate swaps to minimize its rate risk, with the fund sporting negligible duration. The result is significantly lower losses when rates increase, much smaller gains when these decrease, a much more stable share price, and stronger risk-adjusted returns. The fund currently sports a good 6.6% yield to maturity. Dividend yields are even higher, at 8.3%, but these seem to include swap gains, and so are not necessarily indicative of underlying generation of income....
LQDH: Investment-Grade Bond ETF, Interest Rate Hedged, Good 6.6% Yield