ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Beyond Basic Beta Channel
  2. As Income Returns Consider Corporate Bonds Such As MBBB
Beyond Basic Beta Channel
Share

As Income Returns Consider Corporate Bonds Such As MBBB

Tom LydonFeb 01, 2023
2023-02-01

There’s much work to be done for corporate bonds when it comes to fully erasing last year’s declines, but with a January gain of 3.33%, the Bloomberg US Aggregate Bond Index certainly started 2023 on a strong note.

It will take time for a broader bond market resurgence to materialize, but some experts are already saying that the “income” is back in “fixed income,” and this could be a sign that investment-grade corporate bonds are ready to pen their redemption stories. Investors can get in on that act with exchange traded funds such as the VanEck Moody’s Analytics BBB Corporate Bond ETF (MBBB B-).

MBBB holds 175 bonds and makes good on the promise of income, as highlighted by a 30-day SEC yield of 5.31%. On a historical basis, that’s high for most ETFs focusing on investment-grade corporate bonds. That lofty yield could also be a sign that MBBB could generate capital appreciation for investors this year.

“Income is finally back in fixed income thanks to higher yields and coupons. Short1term government bonds and investment grade (IG) credit now offer some of the highest yields in the last two decades,” according to BlackRock research.

As experienced fixed income investors know, the higher up the yield spectrum they go, they’re also likely moving further down the credit quality chain. That underscores the advantages offered by MBBB because quality, in the eyes of some market observers, is likely to be in style when it comes to corporate bonds this year.

“We prefer to earn income right now from these high-quality fixed income assets as rates rise and stay high. Fixed income’s appeal remains intact the longer central banks keep rates near their peak. The lack of duration – or the sensitivity of bond prices to interest rates – in short-term paper also helps preserve income even if yields rise anew,” added BlackRock.

Considering that MBBB yields north of 5% and 83.49% of its holdings are rated investment-grade, the ETF’s effective duration of 6.58 years, though not short-term by any stretch, is tolerable. It could also be rewarding for investors if the Federal Reserve eventually backs away from interest rate increases, as many bond traders believe will happen later this year. Additionally, MBBB could provide investors with some recession protection.

“The case for investment-grade credit has brightened, in our view. We think it can hold up in a recession, with companies having fortified their balance sheets by refinancing debt at lower yields,” concluded BlackRock.

For more news, information, and analysis, visit the Beyond Basic Beta Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X