3 Best High-Yielding Long Term Corporate Bond ETFs (SPLB, VCLT, IGLB)

Long-term corporate bonds typically offer higher returns in comparison to their short-term or intermediate-term counterparts. However, long-term corporate bonds are much more sensitive to interest rate changes, and they are likely to show a lot of volatility when interest rates in the United States rise.

Investors interested in diversifying their portfolios with long-term corporate bonds have several compelling high-yielding exchange-traded funds (ETFs) to choose from. Below are three of the most popular, with information that is available as of May 26, 2021.

Key Takeaways

  • Long-term corporate bonds usually offer higher returns than short-term or intermediate-term corporate bonds.
  • Long-term corporate bonds in comparison, however, are more sensitive to interest rate changes.
  • To gain exposure to long-term corporate bonds, there are many exchange-traded funds (ETFs) that investors can access.
  • Three of the most popular long-term corporate bond ETFs include the SPDR Portfolio Long Term Corporate Bond ETF, the Vanguard Long-Term Corporate Bond ETF, and the iShares 10+ Year Investment Grade Corporate Bond ETF.

SPDR Portfolio Long Term Corporate Bond ETF

The SPDR Portfolio Long Term Corporate Bond ETF (SPLB) demonstrated a one-year return of 8.97% and a 30-day Securities and Exchange Commission (SEC) yield of 3.47%. Created in March 2009, the fund tracks the performance of the Bloomberg Barclays Long U.S. Corporate Index, which is composed of investment-grade U.S. corporate bonds with long maturity profiles.

The fund has assets under management (AUM) of $996 million and has 2,315 holdings in its portfolio. The ETF's assets are concentrated in industrial issuers at 70%, financial services companies at 17.8%, and utility issuers at 12.1%, weighted. The fund holds high-quality bonds with only 47% of its holdings rated A or above. The fund's portfolio demonstrated an average yield-to-worst of 3.46% and an option-adjusted duration of 15.02 years.

The fund exhibited a year-to-date (YTD) loss of 8.55%. For the three-year period, the fund generated an annualized return of 7.41%, while for the five-year period the fund showed an annualized return of 6.72%. The ETF comes with an expense ratio of 0.07% and received a three-star overall rating from Morningstar.

Vanguard Long-Term Corporate Bond ETF

The Vanguard Long-Term Corporate Bond ETF (VCLT) was started in November 2009 to track the investment results of the Bloomberg Barclays U.S. 10+ Year Corporate Bond Index, which is composed of high-quality U.S. corporate bonds that mature mostly in 20 years or more.

The fund has $5.5 billion in total fund assets and 2,461 bonds in its portfolio. The ETF's bond holdings are concentrated on industrials (69.5%), financial services companies (17.3%), and utilities (11.8%). Yield-to-maturity for the fund's portfolio stands at 3.4% and the average duration is 14.6 years.

The ETF showed a YTD loss of 8.69% and a one-year return of 8.48%. The ETF's average annual returns were 7.55% for the three-year period and 6.72% for the five-year period. The 30-Day SEC yield was 3.33%. Morningstar awarded the fund with a three-star overall rating in the corporate bond category. The fund has an expense ratio of 0.05%.

iShares 10+ Year Investment Grade Corporate Bond ETF

The iShares 10+ Year Investment Grade Corporate Bond ETF (IGLB) generated a 12-month trailing distribution yield of 3.36% and a 30-day SEC yield of the same. Started in December 2009, the ETF tracks the performance of the ICE BofAML 10+ Year U.S. Corporate Index, which is composed of long-duration corporate bonds issued by U.S. companies.

There were 2,992 holdings in the fund's portfolio with $2.5 billion in net assets. Compared to its peers, this ETF has a wider sector diversification.

The top sectors in the fund's portfolio are consumer noncyclical at an 18.3% allocation, communications at 12.5%, and electric at 10.9%. Almost the entire fund's portfolio is of investment-grade bonds, with bonds rated BBB having about a 51% allocation. The fund had a yield-to-maturity of 3.37% and an average duration of 14.45 years.

The fund generated a one-year return of 9.82%. The fund demonstrated average annual returns of 7.35% for the three-year period and 6.52% for the five-year period. Morningstar assigned the fund a two-star overall rating in the corporate bond category. The expense ratio for the fund is 0.06%.

Article Sources

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  1. State Street Global Advisors. "SPDR Portfolio Long Term Corporate Bond ETF." Accessed May 26, 2021.

  2. State Street Global Advisors. "SPDR Portfolio Long Term Corporate Bond ETF." Accessed May 26, 2021.

  3. Morningstar. "SPDR Portfolio Long Term Corp Bd ETF." Accessed May 26, 2021.

  4. Vanguard. "Vanguard Long-Term Corporate Bond ETF." Accessed May 26, 2021.

  5. Vanguard. "Vanguard Long-Term Corporate Bond ETF (VCLT)." Accessed May 26, 2021.

  6. Morningstar. "Vanguard Long-Term Corporate Bd ETF." Accessed May 26, 2021.

  7. iShares. "iShares 10+ Year Investment Grade Corporate Bond ETF." Accessed May 26, 2021.

  8. Morningstar. "iShares 10+ Year Invmt Grd Corp Bd ETF." Accessed May 26, 2021.

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