Monday, April 16, 2007

The Battle for Bond ETF Supremacy

Over the weekend, there was an interesting MarketWatch.com article, "In come more bond ETFs: Vanguard enters wide-open market as Barclays throws out the 'junk,'" about the battle for bond ETF supremacy between Barclays (BGI) and Vanguard, with BGI landing the first few punches. Two items in particular caught my interest:

  1. BGI's launch of the first high yield ETF, the iShares iBoxx High Yield Corporate Bond Fund (ticker HYG); and
  2. the very low 0.11% expense rates for the Vanguard bond ETFs

Specific to VIX, volatility and risk, I can see future applications involving the use of a high yield ETF with a government long bond ETF like TLT to look at ratio charts (unfortunately, StockCharts.com does not yet have HYG in their database,) price differential charts, etc. This type of analysis might turn out to be a good complement to the Markit Credit Default Swap data.

Looking more at the “…and More” side of the ledger, here are a handful of ETF-related links that I get a lot of value from:

Finally, while the bond ETF field is already getting crowded, I thought I might point out a half dozen ETFs that have consistently high volume and consequently are as appropriate for trading as they are for longer term investing:

  • SHY - iShares Lehman 1-3 Year Treasury Bond Fund
  • IEF - iShares Lehman 7-10 Year Treasury Bond Fund
  • TLT - iShares Lehman 20+ Year Treasury Bond Fund
  • AGG - iShares Lehman Aggregate Bond Fund
  • LQD - iShares iBoxx $ Invest Grade Corp Bond Fund
  • TIP - iShares Lehman TIPS Bond Fund

1 comments:

Bill Luby said...

I just discovered that the day after I posted this, Will McClatchy had an interesting article about high yield ETFs in the context of the sub-prime fallout:
High Yield ETF Debuts at Pivotal Time

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