20 June 2024: Wealth Product Ideas
Mitigating the Interest Rate Environments
- Upside potential in rate-decreasing periods: The Fed turns to timing of rate cuts, and bond prices are expected to benefit from it. The higher a bond’s maturity/duration, the more its value will increase as interest rates fall.
- Customize your exposure to interest rate risk: target the duration you seek for according to corporate bond ETFs.
- Seek to target different segments of the yield curve: offers exposure to corporate bonds that mature within specific maturity years or ranges, allowing you to target points on the yield curve.
Fund Name (Ticker) | Vanguard Short-Term Corporate Bond ETF (VCSH US) |
Description | Vanguard Short-Term Corporate Bond ETF seeks to track the performance of a market-weighted corporate bond index with a short-term dollar-weighted average maturity. The fund invests by sampling the index, meaning that it holds a range of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics. |
Asset Class | Global Fixed Income |
25-Day Average Volume (as of 18 Jun) | 2,340,664.92 |
Net Assets of Fund (as of 31 May) | US$40,600,000,000 |
Yield to Maturity (as of 31 May) | 5.40% |
Average Effective Maturity (as of 31 May) | 2.9 yrs |
Average Duration (as of 31 May) | 2.6 yrs |
Average Coupon (as of 31 May) | 3.90% |
Management Fees (Annual) | 0.04% |
Top 10 Holdings
(as of 31 May 2024)
(Source: Bloomberg)
Fund Name (Ticker) | Vanguard Intermediate-Term Corporate Bond ETF (VCIT US) |
Description | Vanguard Intermediate-Term Corporate Bond ETF seeks to track the performance of a market-weighted corporate bond index with an intermediate-term dollar-weighted average maturity. The fund invests by sampling the index, meaning that it holds a range of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics. All of the fund’s investments will be selected through the sampling process and at least 80% of the fund’s assets will be invested in bonds included in the index. The fund maintains a dollar-weighted average maturity consistent with that of the index. |
Asset Class | Fixed Income |
25-Day Average Volume (as of 18 Jun) | 5,685,632.04 |
Net Assets of Fund (as of 31 May) | US$46.9B |
Yield to Maturity (as of 31 May) | 5.5% |
Average Effective Maturity (as of 31 May) | 7.4yrs |
Average Duration (as of 31 May) | 6.1yrs |
Average Coupon (as of 31 May) | 4.2% |
Management Fees (Annual) | 0.04% |
Top 10 Holdings
(as of 31 May 2024)
(Source: Bloomberg)
