In the United States, there are 67 investment grade corporate bond ETFs available for trading, excluding inverse and leveraged ETFs and funds with less than $50 million in assets under management. As of August 17, 2022, the investment grade corporate bond sector, as represented by the Bloomberg U.S. Corporate Bond Index, underperformed the overall U.S. equities market, with a total return of -12.9% vs the S&P 500's total return of -2.5%.1The Invesco BulletShares 2023 Corporate Bond ETF (BSCN) is the top-performing investment grade corporate bond ETF over the last year.
We'll look at the top three investment-grade corporate bond ETFs below. All figures are as of August 18, 2022. To concentrate on the funds' investing approach, the top holdings for each ETF omit cash holdings and assets obtained using securities lending profits, unless the cash part is very substantial.
Invesco Bullet Shares 2023 Corporate Bond ETF (BSCN)
- Performance Over One-Year: 25.0%
- Expense Ratio: 0.10%
- Annual Dividend Yield: 1.68%
- Three-Month Average Daily Volume: 591,880
- Assets Under Management: $2.5 billion
- Inception Date: Sept. 17, 2014
- Issuer: Invesco
BSCN monitors the Nasdaq Bulletshares USD Corporate Bond 2023 Index, which measures the performance of a portfolio of US dollar-denominated investment grade corporate bonds maturing or effective in 2023. Using a "sampling" process, the fund invests in at least 80% of the index's corporate bonds. The portfolio's greatest sector allocations are for corporate bonds issued by financial, healthcare, and consumer discretionary sectors. BulletShares funds are unusual in that they return capital to investors when the specified maturity date is reached. The maturity date of BSCN is 2023, and it will expire around December 15, 2023.3
BSCN's top corporate bond holdings include those issued by Apple Inc. (AAPL), which sells personal computers, mobile devices, and services; Bank of America Corp. (BAC), a diversified financial services company; and The Boeing Co. (BA), an aerospace company that serves the defense, commercial, and aerospace industries.4
iShares iBonds Dec. 2022 Term Corporate ETF (IBDN)
- Performance Over One-Year: 0.3%
- Expense Ratio: 0.10%
- Annual Dividend Yield: 1.92%
- Three-Month Average Daily Volume: 329,173
- Assets Under Management: $1.4 billion
- Inception Date: March 10, 20155
- Issuer: BlackRock Financial Management
IBDN aims to follow the Bloomberg December 2022 Maturity Corporate Index, which is made up of US dollar-denominated, investment-grade corporate bonds due in 2022. The ETF offers exposure to investment-grade corporate bonds maturing between January 1, 2022 and December 15, 2022. The fund's largest sector allocations are for corporate bonds issued by banks, consumer staples, and technology companies.5
IBDN's top corporate bond holdings include those of AbbVie Inc. (ABBV), a biopharmaceutical firm; Visa Inc., a financial services company; and Sumitomo Mitsui Financial Group Inc. (SMFG), a Japanese multinational banking and financial services corporation.6
Invesco Bullet Shares 2022 Corporate Bond ETF (BSCM)
- Performance Over One-Year: -0.0%
- Expense Ratio: 0.10%
- Annual Dividend Yield: 1.99%
- Three-Month Average Daily Volume: 582,808
- Assets Under Management: $1.9 billion
- Inception Date: July 17, 2013
- Issuer: Invesc
BSCM tracks the Nasdaq Bullet shares USD Corporate Bond 2022 Index, a basket of U.S. dollar-denominated investment grade corporate bonds having 2022 maturities or effective maturities. Like BSCN, this ETF invests at least 80% of its assets in index-related corporate bonds using "sampling" technique. The portfolio allocates most to financial, IT, and healthcare corporate bonds. As a BulletShares fund, BSCM returns principal to investors upon maturity. In 2022, the fund will mature and end around Dec. 15.7
Our portfolio has over 30% cash and cash equivalents, including T-Bills and the Invesco Government & Agency Portfolio, which comprises short-term, high-quality money market securities. Two AbbVie bonds are the fund's second and third largest holdings after cash.89
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