Practical Ways To Hold Down Costs With Bond ETFs

August 06, 2009

 

Corporate Bond Funds

The data on the corporate bond ETFs confirm this trading vulnerability. Premiums and discounts took off in the corporate bond market, where all four ETFs trade at average premiums and discounts greater than 2%. All four of the funds also consistently traded at a premium.

 

Q2 Premiums And Discounts: Corporate Bond ETFs

Fund

Ticker

Avg. Premium

% Positive

Largest Premium

Smallest Premium

Barclays 1-3 Year Credit Bond Fund

CSJ

2.56%

100%

3.45%

1.58%

Barclays Intermediate Credit Bond Fund

CIU

2.38%

100%

3.48%

1.57%

iBoxx $ Investment Grade Corporate Bond Index Fund

LQD

2.21%

100%

3.95%

0.34%

Barclays Credit Bond Fund

CFT

2.20%

100%

2.93%

1.27%

 

 

High Yield

For high yield, the premiums get more variable. While the average premium shrinks, the absolute premiums and discounts increase. Again, the vast majority of days saw premiums and not discounts.

 

Fund

Ticker

Avg. Premium

% Positive

Largest Premium

Smallest Premium

SPDR Barclays Capital High Yield Bond ETF

JNK

1.87%

93%

4.51%

-0.76%

iBoxx $ High Yield Corporate Bond Index Fund

 

HYG

2.80%

90%

7.03%

-0.73%

PowerShares High Yield Corporate Bond Portfolio

PHB

1.58%

94%

4.5%

-0.79%

 

 

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