Barclays Capital Short Term Corporate Bond ETF (SCPB)
For the first time in years we introduced two corporate bond funds to our portfolios last year. Both have performed very steadily and produced much better returns than cash on deposit.
Why are we looking at the corporate bond funds? Investors anxious for decent returns, or yield, are having to look beyond cash because the interest being paid is so low.
Typical yields on corporate bonds average between 5% and 8% on high-grade bonds.
Big global, bond buyers tend to be institutions such as pension funds, banks and hedge funds.
Individuals will usually be better off using a fund rather than trying to buy the corporate bonds directly. This is because, higher-yielding bonds are expensive and hard to trade and the jargon surrounding bonds is complex and confusing to the novice investor.
If you expect interest rates to rise, you want to keep maturities short because short-term bonds lose less than long-term bond issues when yields jump (bond prices move inversely with rates). We prefer corporate bonds right now because they pay more than government bonds (UK gilts or US treasuries).
The SPDR Barclays Capital Short Term Corporate Bond ETF aims to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Barclays Capital U.S. 1-3 Year Corporate Bond Index (ticker: LF99TRUU). This approach is designed to provide portfolios with low portfolio turnover
Current yield is 4.86% Current price $29.94. Number of holdings is 242, hence giving a good diversification. This is a defensive holding, which is could do well once interest rates start to move up.
Top 10 holdings
NEW CINGULAR WIRELESS SV 8.125 05/01/2012
COUNTRYWIDE FINL CORP 5.8 06/07/2012
GENERAL ELEC CAP CORP 5.875 02/15/2012
HSBC FINANCE CORP 7 05/15/2012
GENERAL ELEC CAP CORP 6 06/15/2012
WELLS FARGO & COMPANY 5.25 10/23/2012
GENERAL ELECTRIC CO 5 02/01/2013
GENERAL ELEC CAP CORP 2.8 01/08/2013
GOLDMAN SACHS GROUP INC 6.6 01/15/2012
MERRILL LYNCH & CO 5.45 02/05/2013
Buy Barclays Capital Short Term Corporate Bond ETF (SCPB) up to $30