Corporate bonds continue to garner interest as investors may be locking in current yields now before eventual rate cuts take place. In the meantime, it's an ideal time to consider corporate bond funds, especially given the attractive yields.
"Demand for the asset class has been extremely robust," the Financial Times mentioned. "Excluding a blip earlier this month, there have been net inflows to credit funds for more than 30 weeks rolling, as investors of all stripes rush to get their hands on the juicy yields on offer in the era of higher-for-longer benchmark interest rates."
It's not just the riskiest corners of the corporate bond market that are offering high yields, but also companies with solid fundamentals. Furthermore, the high interest rate environment doesn't seem to be affecting the bottom line in terms of debt servicing as evidenced by higher corporate profits.
"Even solid companies are issuing debt with high returns — not great news perhaps for them, but good for investors," the FT article added. "And on the whole, it does not appear that companies are struggling with their debt burden."
When it comes to attaining yield via corporate bonds, Vanguard has three options to consider with varying durations. For shorter-termed debt, there's the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH). The fund seeks to track the performance of a market-weighted corporate bond index with a short-term dollar-weighted average maturity. It employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. 1-5 Year Corporate Bond Index. As of June 20, its 30-day SEC yield stands at 5.27%.