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Despite Current Risks, Corporate Bonds Offer a Compelling Option
ETF Trendsยท 2025-09-05 17:16
Group 1 - The current market environment presents yield opportunities in corporate bonds, with higher credit quality due to strong company fundamentals despite existing risks [2][4] - The ICE BofA US Corporate Index Option-Adjusted Spread is at 0.75, the lowest since June 1998, indicating low defaults, low borrowing, high economic growth, and corporate resilience [3] - The yields on many bonds are significantly higher than in previous years, providing buffers against volatility and helping investors meet long-term return objectives through income yields [4] Group 2 - Short-term bonds, such as the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH), are recommended to counter potential rate cuts, with a 30-day SEC yield of 4.31% as of September 3 [5] - For those seeking higher yields, intermediate bonds like the Vanguard Interim-Term Corporate Bond ETF (VCIT) offer a balance between mitigating rate risk and achieving greater yields [6] - VCIT tracks the Bloomberg U.S. 5-10 Year Corporate Bond Index and has a 30-day SEC yield of 4.92% as of September 3, reflecting the higher yield of intermediate bonds [7]