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Vanguard Short-Term Corporate Bond Index Fund ETF Shares is a good option for investors looking to park their cash temporarily in a low-risk vehicle. The fund invests in a well-diversified basket of almost 2,500 corporate bonds with an average yield of 5.5% and average duration of 2.7 years. The fund's holdings are mostly rated AA, A, or BBB, with a low risk of default, and the majority of the bonds will mature within 1 to 4 years.
Fixed income investors are undoubtedly hoping that the current consensus regarding the Federal Reserve not raising interest rates for the remainder of this year proves true. The July reading of the Consumer Price Index (CPI) appears to imply the central bank might just have that latitude.
With the markets expecting interest rates to fall, the bond market may see more upside, including corporate bonds. Those haven't gotten much attention in various parts of the globe, according to research by Fisch Asset Management.
VCSH is a Buy due to its high yield and potential for capital appreciation, making it a good option for investors looking to ride out the coming recession. VCSH primarily invests in investment-grade corporate bonds that mature in 1-5 years. VCSH is a better choice than other ETFs for investors seeking high current yield and capital appreciation.
Both investment-grade and high yield corporate debt performed solidly in the first half of 2023. Broadly speaking, fixed income market observers believe that this trend will continue in the second half.
Junk bond ETFs may fall into trouble due to the ongoing banking crisis.
U.S. short-term U.S. treasuries and financial ETFs traded with an outsized volume yesterday.
As yields rise in tandem with interest rates, corporate bonds are looking attractive to fixed income investors. A record number of them are piling into corporate bonds, particularly those of the highest quality.
Choosing the right corporate bond ETF can be a challenge. After all, which funds are best suited to weather whatever comes our way in the new year?
VCSH invests in short-term investment grade corporate bonds in the U.S. The fund faces more downside risks than U.S. treasuries.