RRising inflation has driven benchmark yields higher, and corporate bonds have not been immune to the bond price rout in 2022. That said, there are bargains to be had. in the corporate debt market if investors know where to look.
The US Federal Reserve is expected to continue to tighten monetary policy, pushing yields even higher. With bond prices moving inversely to yields, bonds fell as the stock market fell.
When the pandemic hit the global market in 2020, investor capital flowed into bonds, pushing yields to the point where they turned negative in some countries. Today, the corporate bond market sees negative yields dissipating.
“Negative yields have disappeared from the global corporate bond market as investors brace for monetary tightening,” said one. Bloomberg Article Remarks.
“Each rating of a Bloomberg index that tracks the global investment-grade corporate bond market returned 0% or more as of Friday’s close, calculated using the midpoint between bid and ask prices,” it added. article. “This is a dramatic turnaround from August, when more than $1.5 trillion in debt, most of it in Europe, performed below zero.”
Gain exposure to corporate bonds with VTC
Investors looking for bargains in corporate bonds can consider gaining global exposure with the Vanguard Total Corporate Bond ETF Equity ETF (VTC). The fund seeks to track the performance of a broad market-weighted corporate bond index.
The fund is a fund of funds and uses an index-based investment approach designed to track the performance of the Bloomberg US Corporate Bond Index, which measures the investment-grade, fixed-rate, taxable corporate bond market. The index includes US dollar-denominated securities that are publicly issued by industrial, utility and financial issuers.
VTC offers you:
- Performance linked to the Bloomberg US Corporate Bond Index.
- Broad and diversified exposure to the US investment grade corporate bond market.
- A unique ETF structure of ETFs.
- A mid-term portfolio with exposure to short, medium and long-term maturities.
- Current income with high credit quality.
For more news, insights and strategy visit the Fixed income channel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.