Long-Term Vs. Short-Term: Which Of These Monthly-Paying Corporate Bond ETFs Is Right For You?

Unlike government bonds, corporate bonds have one major advantage: they offer strong returns.

When investing in corporate bonds, there are many variables an investor should consider such as credit risk, interest rates, Federal Reserve policy, and the size of their position. Additionally, there are many types of bonds to consider such as short-term, medium-term and long-term bonds which have maturities ranging from five years or less, five to twelve years, and more than twelve years, respectively.

This is why some investors may prefer to invest in actively managed exchange-traded funds that seek to invest in the maturities of their preferences.

See Also: 3 Reasons To Invest In Treasury ETFs Over Treasuries Themselves

• Vanguard Long-Term Corporate Bond ETF VCLT is offering a dividend yield of 4.56% or $3.28 per share annually, making monthly payments, with an inconsistent track record of increasing its dividends. Vanguard Long-Term Corporate Bond ETF seeks to track the performance of a market-weighted corporate bond index with a long-term dollar-weighted average maturity. The fund currently has total assets under management of $4.8 billion with a turnover rate of nearly 36%. The Bloomberg U.S. 10+ Year Corporate Bond Index measures the investment return of U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility, and financial companies with maturities greater than 10 years.
• BlackRock Ultra Short-Term Bond ETF ICSH is offering a dividend yield of 0.95% or 47 cents per share annually, through monthly payments, with an inconsistent track record of increasing its dividends. BlackRock Ultra Short-Term Bond ETF seeks to provide current income consistent with the preservation of capital. The fund seeks to provide income by investing in a broad range of short-term U.S. dollar-denominated investment-grade fixed- and floating-rate debt securities and money market instruments. The fund has assets under management north of $6.9 billion and a management fee of 0.08%.