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Max Manturov

Max Manturov

Head of investment research regulated by CySec 11.10.2021

How to reduce risks during a market correction: 3 corporate bond ETFs

How to reduce negative portfolio volatility in times of increased volatility? One way is to reallocate funds to highly rated corporate bonds (Investment Grade). For diversification purposes, we recommend buying ETFs that include such bonds. Our analysts have selected three of the largest and most promising funds that would be perfect for this purpose.

Vanguard Intermediate - Term Corporate Bond ETF

Ticker: VCIT.US.

Index: Bloomberg US Aggregate Credit - Corporate (5-10 Y).

Current price: $94.33.

Assets under management, AUM: $46.38 billion.

Expense Ratio: 0.05%.

Number of stock names in ETF: 2061.

Weighted average yield to maturity: 1.92%.

Weighted Average Maturity: 7.4 years.

Modified duration: 6.5 years.

Instruments with the highest allocation to ETFs:

● United States Treasury Notes - 1.125% 31-AUG-2028 (0.44%);

● T-Mobile USA Inc. - 3.875% 15-APR-2030 (0.4%);

● Bristol-Myers Squibb Company - 3.45% 15-NOV-2027 (0.4%);

● Boeing Company - 5.04% 01-MAY-2027 (0.37%);

● Bank of America Corporation - 3.419% 20-DEC-2028 (0.33%).

ETF's year-to-date yields: -0,97%.

Annual dividend yield: 2.46%.

Read more about this ETF.


iShares iBoxx $ Investment Grade Corporate Bond ETF

Ticker: LQD.US.

Index: iBoxx USD Liquid Investment Grade Index.

Current price: $134.44.

Assets under management, AUM: $39.22 billion.

Expense Ratio: 0.14%.

Number of stock names in ETF: 2438.

Weighted average yield to maturity: 2.31%.

Weighted Average Maturity: 13.8 years.

Modified duration: 9.68 years.

Instruments with the highest allocation to ETFs:

● GE Capital International Funding Co. - 4.418% 15-NOV-2035 (0.36%);

● Anheuser-Busch Cos. LLC - 4.9% 01-FEB-2046 (0.3%);

● CVS Health Corporation - 5.05% 25-MAR-2048 (0.27%);

● Goldman Sachs Group Inc. - 6.75% 01-OCT-2037 (0.21%);

● Wells Fargo & Company - 5.013% 04-APR-2051 (0.2%).

Year-to-date ETF yields: -1,54%.

Annual dividend yield: 2,34%.

Read more about this ETF.


SPDR Portfolio Intermediate Term Corporate Bond ETF

Ticker: SPIB.US.

Index: Bloomberg US Aggregate Credit - Corporate - Investment Grade - Intermediate.

Current price: $36.52

Assets under management, AUM: $5.79 billion.

Expense Ratio: 0.07%.

Number of stock names in the ETF: 4233.

Weighted average yield to maturity: 1.57%.

Weighted Average Maturity: 5.13 years.

Modified duration: 4.54 years.

Instruments with the highest allocation to ETFs:

● Bank of America Corporation - 3.419% 20-DEC-2028 (0.35%);

● Mitsubishi UFJ Financial Group Inc. - 3.761% 26-JUL-2023 (0.18%);

● T-Mobile USA Inc. - 3.875% 15-APR-2030 (0.17%);

● Citigroup Inc. - 3.887% 10-JAN-2028 (0.17%);

● Bank of America Corporation 3.004% 20-DEC-2023 (0.16%).

Year-to-date ETF yields: -0,62%.

Annual dividend yield: 1,63%.

Read more about this ETF.


How to Buy ETFs?

If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.

After opening an account, you can buy ETFs in either of the following ways:

Freedom24 Web Platform: In the Web Terminal section, type in the search box, and select the appropriate ETF in the results. Open a secure session in the trading window on the right, select the number of securities you want to buy, and click Buy.

Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that will show up, type and select the appropriate ETF in the results. You will then see the ETF in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of securities you want to buy and click Buy.


Go to Freedom24 web platform >>


*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Europe Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance Europe Ltd. do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance Europe Ltd. and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.



  • Sources of information

    https://advisors.vanguard.com/investments/products/vcit/vanguard-intermediate-term-corporate-bond-etf#priceanddistributions

    https://www.ishares.com/us/products/239566/ishares-iboxx-investment-grade-corporate-bond-etf?qt=LQD

    https://www.ssga.com/us/en/intermediary/etfs/funds/spdr-portfolio-intermediate-term-corporate-bond-etf-spib

  • Recommendation evaluation methodology in accordance with Terms and Conditions of Market Research Use
    Freedom Finance analysts perform a three-stage analysis. They select a promising industry based on the latest news, statistics and industry-specific metrics. They assess the supply and demand situation and its future development dynamics. Industry’s investment attractiveness is mostly affected by the forecasted market growth rates; total addressable market, player concentration level and likeliness of a monopoly formation, as well as the level of regulation by various entities or associations.

    The assessment is followed by the comparative analysis based on the selected sample. The sample comprises companies with a market capitalization of over USD 1 billion, but there is space for exceptions (when the suitable level of liquidity for company’s securities is available on the stock exchange). The selected companies (peers) are being compared against each other based on multipliers (EV/S, EV/EBITDA, PE, P/FCF, P/B), revenue growth rates, marginality and profitability (operating income margin, net income margin, ROE, ROA), and business performance.

    Having completed the comparative analysis, the analysts carry out a more in-depth research of the news about the selected company. They review company’s development policy, information about its current and potential mergers and acquisitions (M&A activity), and assess the efficiency of company's inorganic growth and other news about it over the past year. The main objective at this stage is to identify the growth drivers and evaluate their stability, as well as the extent of impact they have on the business.

    Based on all the data collected, the analysts determine the weighted forecasted figures of company’s growth rates and proposed business marginality, which are used to calculate the company’s multiplier-based estimated value. The said value enables setting the stock price target and stock value growth potential.

    The expected timing of the idea implementation is set depending on the current market situation, volatility level and available forecasting horizon for industry and company development. The forecasting period is normally set between 3 and 12 months.