Investment-Grade Corporate Bond

Investment-grade corporate bond funds and ETFs invest in debt securities issued by... Investment-grade corporate bond funds and ETFs invest in debt securities issued by companies carrying the lowest credit risk that a bond issuer may default, as determined by rating agencies Moody’s and Standard and Poor’s (S&P). To be classified as Investment-grade, a corporate bond must typically be rated Baa3 or higher by Moody’s, or BBB or higher by S&P. Investment-grade corporate bonds can form part of a conservative fixed-income portfolio, as they usually have a lower risk of default. These bonds are attractive for investors who do not want to lose their investment capital and, accordingly, are willing to accept lower income to achieve this goal. Companies issue investment-grade bonds with different maturities. The average duration (time to maturity) of a bond indicates how sensitive its price will be to changes in interest rates. Investors who are concerned about the possibility of a rise in interest rates will tend to own investment-grade corporate bonds with a low duration. Meanwhile, investors who think interest rates may rise will tend to own investment-grade bonds with a high duration. Last Updated: 01/24/2025 View more View less

Investment-grade corporate bond funds and ETFs invest in debt securities issued by companies carrying the lowest credit risk that a bond issuer may default, as determined by rating agencies Moody’s and Standard and... Investment-grade corporate bond funds and ETFs invest in debt securities issued by companies carrying the lowest credit risk that a bond issuer may default, as determined by rating agencies Moody’s and Standard and Poor’s (S&P). To be classified as Investment-grade, a corporate bond must typically be rated Baa3 or higher by Moody’s, or BBB or higher by S&P. Investment-grade corporate bonds can form part of a conservative fixed-income portfolio, as they usually have a lower risk of default. These bonds are attractive for investors who do not want to lose their investment capital and, accordingly, are willing to accept lower income to achieve this goal. Companies issue investment-grade bonds with different maturities. The average duration (time to maturity) of a bond indicates how sensitive its price will be to changes in interest rates. Investors who are concerned about the possibility of a rise in interest rates will tend to own investment-grade corporate bonds with a low duration. Meanwhile, investors who think interest rates may rise will tend to own investment-grade bonds with a high duration. Last Updated: 01/24/2025 View more View less