2024-05-14 08:39:15 ET
Summary
- The iShares Broad USD Investment Grade Corporate Bond ETF is a fixed-income ETF with $10.8 billion in AUM.
- The fund primarily invests in single-A and triple-BBB corporate investment grade bonds.
- Currently, interest rates (risk-free rates) are high but expected to stay that way due to inflation concerns. Credit spreads (risk premium) are conversely very tight, near historic lows.
- Tight credit spreads are unsustainable and likely to widen in the future, while high inflation expectations are putting upward pressure on risk-free rates.
- The fund comes with a 6.6-year duration, a 5.62% 30-day SEC yield, and a portfolio OAS of 86 bps.
Thesis
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For further details see:
USIG: Corporate Bonds Are Not Appealing At Current Spread Levels