I am looking for an investment-grade bond ETF to round up my portfolio. The criteria I used include the following:
- Low expenses : the lower the expense ratio, the better.
- Diversification : for investment grade bond funds, generally the more holdings, the better.
- Amount of assets & trading volume : generally the larger the better (improves liquidity, smaller trading spreads).
- Duration : duration is a measure of the sensitivity of the fund price to interest rate changes. At this juncture in the economy, I would prefer not to go too long on duration.
- Credit quality : no junk bond fund for me.
The ETFs that I narrowed down to include BSV, CSJ, AGG, BIV, CIU and LQD. These are listed in the table below:
From the look of it, I would probably go with CSJ, Â the iShares Barclays 1-3 year credit bond ETF.