Focusing on Valuation in Corporate Bonds
June 23, 2021
Investors today face a challenge: sacrifice income, or take on more risk.
Investment grade corporate bonds can provide higher yields versus Treasury bonds, however over the past decade corporate leverage has increased while credit spreads have declined.
Introducing a smarter approach to corporate credit:
VanEck Vectors Moody’s Analytics IG Corporate Bond ETF (MIG)
VanEck Vectors Moody’s Analytics BBB Corporate Bond ETF (MBBB).
MIG and MBBB use a forward looking assessment of risk and value that hundreds of the world’s largest institutional investors have relied on for decades.
The fair value of each bond is calculated daily through a process that is based on decades of corporate credit risk research, and is driven by market-based information like a company’s stock price, as well as its balance sheet information and many other inputs.
Bonds with similar credit ratings and maturities can have very different fair values. This process can identify bonds that are undervalued relative to their risk that may also offer attractive yields and upside potential, as the market recognizes the true value of these bonds over time.
At the same time, these strategies aim to avoid bonds which are overpriced or expected to decline in value in the future, due to a forecasted decline in credit quality or a downgrade to high yield.
The U.S. investment grade corporate bond market is vast. Owning the entire market means owning bonds that may be overpriced or have hidden risk. With the right tools, it’s possible to identify the most attractively valued bonds that may provide attractive yield and potential upside, while avoiding the rest.
MIG provides exposure to the most attractively valued bonds from the broad investment grade market, while MBBB, focuses on the BBB rated segment, and both avoid bonds most at risk of being downgraded to high yield, providing investors with attractive yield, without having to take on more risk.
To Learn more visit vaneck.com/corporatecredit
This material does not constitute an offer to sell or solicitation to buy any security, including shares of the VanEck Vectors Moody’s Analytics IG Corporate Bond ETF or VanEck Vectors Moody’s Analytics BBB Corporate Bond ETF (together the “Funds”). An offer or solicitation will be made only through a fund’s prospectus or summary prospectus and will be subject to the terms and conditions contained therein The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.
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An investment in the VanEck Vectors Moody’s Analytics IG Corporate Bond ETF (MIG) and VanEck Vectors Moody’s Analytics BBB Corporate Bond ETF (MBBB ) may be subject to risks which include, among others, investing in European issuers, foreign securities, foreign currency, BBB-rated bond, credit, interest rate, liquidity, restricted securities, consumer staples sector, financials sector, energy sector, communication services sector, market, operational, high portfolio turnover, call, sampling, index tracking, authorized participant concentration, new fund, absence of prior active market, trading issues, passive management, data, non-diversified, concentration and trading, premium/discount and liquidity of fund shares risks. The Funds’ assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors. Bonds and bond funds are subject to interest rate risks and will decline in value as interest rates rise.
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