Are you looking for a relatively low level of risk yet with some investment return? If so, think about corporate bonds via our Corporate Bonds ETF. They have become an increasingly important part of an investors’ portfolios in recent years simply because they still provide a reasonable return in a yield starved world.
Risk of a Corporate Bonds ETF: Investors should consider risks before investing. See dedicated risk factors section on this website.
Big companies need to raise capital regularly to grow, and they do so regularly through the bond markets. They use capital to invest in innovation and expansion – it’s vital fuel for any business. In return, companies normally commit to reward investors by paying a coupon, or interest, on the bond, as well as to repay it at maturity after a set number of years.
So, by investing in corporate bonds you help companies to finance their growth.
Quite candidly, our Corporate Bonds ETF delivers a blend of low cost and high quality.
Our Corporate Bonds ETF is one of the lowest cost ETFs to buy corporate bonds (0.15% total expense ratio).
Unlike some other ETF managers, we buy the underlying bonds (physical replication) and we do currently not lend out securities.
Our Corporate Bonds ETF invests in 40 different bonds issued by some of the world’s best-known companies, from different industries and countries all over the world. That means we reduce your risk. The companies include names such as Anheuser-Busch (beer), Novartis (pharmaceutical), Danaher (life sciences), Daimler (automobile) and IBM (information technology).
To reduce currency risk, we only invest in bonds issued in euros.
The underlying index assigns higher weights to companies with better Sustainable Development Key Performance Indicator (SD-KPI) scores. SD-KPIs are three particularly material environmental, social and governance (ESG) indicators for the expected business development of companies in 68 different sectors. The SD-KPI Standard was developed by SD-M on behalf of the German Environment Ministry and supported by the Sustainability Accounting Standards Board (SASB).
Risk: Investors should consider risks before investing in a Corporate Bonds ETF. See dedicated risk factors section on this website.
Lower risk: Typically lower reward
Higher risk: Typically higher reward
Changes in interest rates have a significant influence on the results of fixed-income securities issued by companies. Potential or actual downgrades in the credit rating can increase the assumed risk level. This is one of the risk factors to consider before investing in a Corporate Bonds ETF.
The issuer of the security held by a Corporate Bonds ETF may be unable to pay interest that has fallen due or repay capital. It is worth considering this before investing in the Fund.
Lower liquidity means there are not enough buyers or sellers to allow a Corporate Bonds ETF to easily trade the investments. This is an additional risk factor to take into consideration when investing in the Fund.
For more information on risks, please see the “Risk Factors” section of the relevant Fund’s prospectus, available on www.vaneck.com.