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This ETF offers exposure to investment grade U.S. corporate bonds, an asset class that many investors and advisors believe should hold a core position in long-term, buy-and-hold portfolios. This asset class has the potential to offer a significant yield upgrade from Treasuries without exposing investors to the risk that often accompanies high yield bonds. While corporate debt is often included in total bond market ETFs such as AGG and BND, it is noted that allocations are often on the small side. As such, a position in products such as PFIG might make sense as complementary additions to a long-term portfolio.
PFIG distinguishes itself from other products in the Corporate Bonds ETFdb Category by the weighting methodology employed by the underlying index. Most bond ETFs are linked to cap weighted indexes that give the largest allocations to the biggest issuers of debt and to the most expensive securities. That approach has multiple potential drawbacks; the biggest debtors receive the highest weightings, and there exists a tendency to overweight overvalued securities. PFIG offers an alternative to cap weighted bond ETFs that may have appeal to investors looking to break the link between security weightings and the level of debt maintained. Rather, PFIG is constructed with the goal of giving the largest weightings to the companies with the greatest ability to service their debt. This is accomplished by scoring issuers based on four fundamental measures of size, including dividends and cash flow. The result is a portfolio that is similar to more popular products such as LQD, but backed by a more sound construction methodology.
It should be noted that CBND shares a generally similar objective, but uses slightly different metrics to score the issuers of debt. One potential drawback of PFIG is the slightly above average expense ratio; investors will pay a bit more for the RAFI methodology than they would for LQD. In our mind, however, the additional fee--which is just a few basis points--is well worth the exposure to the superior methodology.
The adjacent table gives investors an individual Realtime Rating for PFIG on several different metrics, including liquidity, expenses, performance, volatility, dividend, concentration of holdings in addition to an overall rating. The "A+ Metric Rated ETF" field, available to ETFdb Pro members, shows the ETF in the Corporate Bonds with the highest Metric Realtime Rating for each individual field. To view all of this data, sign up for a free 14-day trial for ETFdb Pro. To view information on how the ETFdb Realtime Ratings work, click here.
Fact sheets are issued by the ETF provider and framed by ETFdb.com. Information contained within the fact sheet is not guaranteed to be timely or accurate.
Copyright MSCI ESG Research LLC [2018]. All Rights Reserved. MSCI ESG Research LLC’s (“MSCI ESG”) Fund Metrics products (the “Information”) provide environmental, social and governance data with respect to underlying securities within more than 23,000 multi-asset class Mutual Funds and ETFs globally. MSCI ESG is a Registered Investment Adviser under the Investment Advisers Act of 1940. MSCI ESG materials have not been submitted, to nor received approval from, the US SEC or any other regulatory body. None of the information constitutes an offer to buy or sell, or a promotion or recommendation of, any security, financial instrument or product or trading strategy, nor should it be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. None of the Information can be used to determine which securities to buy or sell or when to buy or sell them. The Information is provided “as is” and the user of the Information assumes the entire risk of any use it may make or permit to be made of the Information. All Information is provided solely for your internal use, and may not be reproduced or redisseminated in any form without express prior written permission from MSCI. Neither MSCI ESG nor any of its affiliates or any third party involved in or related to creating any Information makes any express or implied warranties, representations or guarantees, and in no event will MSCI ESG or any such affiliate or third party have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) relating to any Information. More information on MSCI ESG Fund Metrics, provided by MSCI ESG Research LLC, can be found at https://www.msci.com/esg-fund-metrics.
Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use, please see disclaimer.
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