Corporate Bonds ETF

Income Opportunities

Companies need to raise capital regularly to grow, and they do so regularly through the bond markets. Such bond issues would usually offer higher yields compared to government bonds to compensate for their credit risk. After years of low yields, corporate bonds have seemingly gotten their shine back once central banks started raising interest rates. If you are looking to invest in bonds, you could consider VanEck’s Corporate Bonds ETF, which provides an ESG-integrated vehicle to invest in 40 largest and most liquid EUR bonds.

Corporate Bonds ETF - Header

VanEck iBoxx EUR Corporate UCITS ETF

  • Access to 40 largest and most liquid Euro-denominated corporate bonds
  • Only bonds with an investment grade rating
  • ESG integration
TCBT

ETF Details

ETF Details

Basis-Ticker: TCBT
ISIN: NL0009690247
TER: 0.15%
AUM: €35.6 M (as of 28-05-2024)
SFDR Classification: Article 8

Lower risk

Typically lower reward

Higher risk

Typically higher reward
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Risk: Investors in the Corporate Bonds ETF may lose money up to the total loss of their investment due to the Main Risk Factors such as Industry or Credit Risk, Liquidity Risk and Changes in Interest Rates as described in the KID and prospectus.

Why invest in a Corporate Bonds ETF?

Income potential with historically moderate risks

Corporate bonds generally offer higher yields compared to government bonds. This is because corporate issuers typically need to compensate for the additional credit risk they carry compared to bonds of sovereign bonds.

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 is a 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. Thus, by investing in corporate bonds you help companies to finance their growth.

Investing in corporate bonds can be a fitting opportunity for investors looking for:

  • Higher yields compared to government bonds
  • Regular income
  • Risk diversification
  • Credit quality options

Investing in Corporate Bonds Can Be Beneficial to Investors for Several Reasons

Why the VanEck Corporate Bonds ETF?

The Fund delivers a blend of low cost and high quality. For the risks involved in investing in the Corporate Bonds Fund, including Changes in Interest Rates, Credit Risk and Liquidity Risk please refer to the Risk Factors section below.

Sector Diversification

VanEck's Corporate Bonds ETF is diversified across a range of sectors:

Financial companies provide a range of financial products and services to individuals, businesses, and governments and play a crucial role in the economy by facilitating the flow of funds between savers and borrowers. Financial companies operate in sectors such as banking, insurance, investment management, brokerages and payment services.

JP Morgan2 is a leading global financial services firm with assets of $2.6 trillion and a history of over 200 years. Their business lines include investment banking, financial services for consumers and small business, commercial banking, financial transactions processing and asset management.


2 Part of the portfolio as of 31/05/2023.

Healthcare companies provide products and services aimed at improving people's health and well-being. Healthcare companies are mainly active in the following fields: pharmaceuticals, biotechnology, medical equipment and healthcare services.

Novartis3 is a Swiss healthcare company operating mainly in the pharmaceutical and biotechnology sectors. It is one of the largest pharmaceutical companies globally. Their portfolio includes drugs for cancer treatment, cardiovascular diseases, respiratory disorders, autoimmune conditions, infectious diseases, and rare genetic disorders.

3 Part of the portfolio as of 31/05/2023.

Companies in the Telecommunications sector provide services and infrastructure for transmitting and exchanging information. Main business lines of Telecommunications companies include building and operation of network infrastructure, telecommunications equipment, wireless data services, voice, providing internet and other data communication services.

Deutsche Telekom4 is one of the world's leading integrated telecommunications companies, with 245 million mobile customers in more than 50 countries. They provide fixed-network/broadband, mobile communications, Internet, and IPTV products and services for consumers, and information and communication technology (ICT) solutions for corporate customers.

4 Part of the portfolio as of 31/05/2023.

Companies in the automotive sector are involved in the design, development, manufacturing, and sale of vehicles, as well as related components, parts, and services.

Continental AG5 is a German company mainly active in the automotive segment. It engages in the manufacture and development of tires and rubber products, safety technologies, powertrains, and other car parts and technologies. Continental operates across a wide range of customers, including producers of passenger cars, trucks, buses, bicycles and motorcycles as well as construction site and special-purpose vehicles.

5 Part of the portfolio as of 31/05/2023.

Transportation is one of the sectors that are included in the VanEck Corporate Bonds ETF. Transportation companies are involved in the movement of goods and people. Common activities and services provided by transportation companies include freight, passenger and public transportation, shipping, logistics, vehicle rental and leasing.

DB Group6 is a leading provider in the mobility and logistics sector, and primarily consists of the integrated rail system focused on passenger and freight transport in Germany. Its two major international subsidiaries are DB Schenker, focused on international logistics and DB Arriva, which operates public transportation services across Europe.

6 Part of the portfolio as of 31/05/2023.

Utilities companies are responsible for the provision and distribution of essential services to residential, commercial, and industrial customers. These services typically include electricity generation and distribution, water supply and treatment, natural gas distribution, heating and waste management.

E.ON7 is a German energy utility that produces and distributes electricity, gas and heat, and provides other energy-related products and services. The company produces electricity from onshore and offshore wind farms, solar PV, and energy storage sources; and purchases energy from other companies. E.ON also operates power and gas networks, and carries out maintenance and repairs, and expansion of these networks; and plans, builds, operates and manages renewable generation assets.

7 Part of the portfolio as of 31/05/2023.

Financials
Healthcare
Telecommunications
Automotive
Transportation
Utilities

Credit Risk

Credit risk refers to the issuer’s probability of default, meaning they failed to pay out a loan or meet their financial obligations. Such event would result in financial loss for the lender or creditor. The potential loss amount would depend on the bond’s probability of default and its recovery rate.

Credit risk is normally higher for corporate entities than for government bonds, since they are only backed by the company cash flows and are therefore perceived to be riskier. Companies with a higher perceived level of credit risk would be forced to offer higher interest payments to compensate for the higher probability of default.

Income Potential

Corporate Bonds ETFs Have Historically Offered Higher Yields Compared to Government Bond ETFs

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* Past performance is not a reliable indicator for future performance. Source: VanEck. Yield is represented by Yield-to-Worst.

Performance of Corporate Bonds ETF

Source: VanEck. Past performance is not a reliable indicator of future performance.

Top 10 Holdings

Holding Name Shares % of Net
Assets
Novartis Finance Sa 1779000 4.37
Thermo Fisher Scientific Finance I Bv 1773000 4.29
Jpmorgan Chase & Co 1587000 4.14
Hsbc Holdings Plc 1236000 3.52
At&T Inc 1257000 3.34
Bayer Ag 1085000 3.25
Cdp Financial Inc 1223000 3.24
Bank Of America Corp 1234000 3.23
Anheuser-Busch Inbev Sa/Nv 1112000 3.11
Booking Holdings Inc 975000 2.94
Top 10 Total (%) 35.40

Main Risk Factors of a Corporate Bonds ETF

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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.

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The issuer of the security held by the Fund may be unable to pay interest that has fallen due or repay capital. That is another risk factor to take into account when considering an investment in this ETF.

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Lower liquidity means there might not be enough buyers or sellers to allow the Fund to easily trade the investments. This is an additional factor to take into consideration before investing in a Corporate Bonds ETF.

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