Comparing investment-grade loans and Treasuries: A key guide

Part 4
Comparing investment-grade loans and Treasuries: A key guide (Part 4 of 4)

Popular ETFs that track Treasuries and investment-grade loans

Important ETFs

Both investment-grade loans and Treasuries have a number of ETFs tracking them. The iShares series tracks both asset classes. For Treasuries, the ETFs available include the iShares 20+ Year Treasury Bond (TLT), the iShares 1-3 Year Treasury Bond (SHY), the iShares 7-10 Year Treasury Bond (IEF), and the iShares 10-20 Year Treasury Bond (TLH).

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The iShares 1-3 Year Treasury Bond (SHY) ETF tracks the Barclays Capital U.S. 1-3 Year Treasury Bond Index, which measures the performance of U.S. Treasury securities that have a remaining maturity of at least one year and less than three years. With an expense ratio of 0.15%, 96.15% of the ETF’s holdings are in U.S. government debt securities. This ETF contains 59 holdings, and the top ten holdings comprise 61.44% of the ETF.

The iShares 7-10 Year Treasury Bond (IEF) ETF tracks the Barclays Capital U.S. 7-10 Year Treasury Bond Index, which measures the performance of U.S. Treasury securities that have a remaining maturity of at least seven years and less than ten years. With an expense ratio of 0.15%, 97.78% of the ETF’s holdings are in U.S. government debt securities. This ETF contains 15 holdings, and the top ten holdings comprise 97.33% of the ETF.

The iShares 10-20 Year Treasury Bond (TLH) ETF tracks the Barclays Capital U.S. 10-20 Year Treasury Bond Index, which measures the performance of U.S. Treasury securities that have a remaining maturity of at least ten years and less than twenty years. With an expense ratio of 0.15%, 99.59% of the ETF’s holdings are in U.S. government debt securities. This ETF contains 18 holdings, and the top ten holdings comprise 80.51% of the ETF.

The iShares 20+ Year Treasury Bond (TLT) ETF tracks the Barclays Capital U.S. 20+ Year Treasury Bond Index, which measures the performance of U.S. Treasury securities that have a remaining maturity of at least 20 years. With an expense ratio of 0.15%, 99.2% of the ETF’s holdings are in U.S. government debt securities. This ETF contains 22 holdings, and the top ten holdings comprise 78% of the ETF.

Popular ETFs tracking investment-grade corporate loans include the Market Vectors Investment Grade Floating Rate ETF (FLTR), the iShares Floating Rate Bond (FLOT), and the SPDR Barclays Cap Investment Grade Floating Rate ETF (FLRN).

Issued by Van Eck, the Market Vectors Investment Grade Floating Rate ETF (FLTR) ETF tracks Market Vectors Investment Grade Floating Rate Bond Index, which comprises U.S. dollar-denominated floating rate notes issued by corporate issuers and rated investment-grade by at least one of three rating services. With an expense ratio of 0.19%, 85.8% of the ETF’s holdings are in corporate debt securities. This ETF contains 162 holdings, and the top ten holdings comprise 22.43% of the ETF. FLTR’s largest holding is JPMorgan Chase (JPM), a financial services company with a global presence that comprises 3.02% of the ETF’s holdings.

The iShares Floating Rate Bond (FLOT) ETF tracks the Barclays Capital <5 years Floating Rate Note Index, which measures the performance of U.S. dollar-denominated investment-grade floating rate notes. Securities in the index have a remaining maturity of greater than or equal to one month and less than five years. With an expense ratio of 0.2%, 58.28% of the ETF’s holdings are in corporate debt securities. This ETF contains 350 holdings, and the top ten holdings comprise 9.21% of the ETF. FLOT’s largest holding is Goldman Sachs Grp (GS), an investment banking, securities, and investment management services company that comprises 1.23% of the ETF’s holdings.

The SPDR Barclays Cap Investment Grade Floating Rate ETF (FLRN) tracks the Barclays Capital <5 years Floating Rate Note Index, which measures the performance of U.S. dollar-denominated investment-grade floating rate notes. With an expense ratio of 0.15%, 56.81% of the ETF’s holdings are in corporate debt securities. This ETF contains 341 holdings, and the top ten holdings comprise 9.76% of the ETF. FLRN’s largest holding is also Goldman Sachs Grp (GS), which comprises 1.6% of the ETF’s holdings.

To learn more about investing in fixed income ETFs, see the Market Realist series Comparing leveraged loans and high yield bonds: A guide.

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