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Is Inspire Corporate Bond ETF (IBD) a Strong ETF Right Now?
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Designed to provide broad exposure to the Investment Grade Corporate Bond ETFs category of the market, the Inspire Corporate Bond ETF (IBD - Free Report) is a smart beta exchange traded fund launched on 07/10/2017.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Inspire. IBD has been able to amass assets over $246.45 million, making it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Inspire Corporate Bond Impact Equal Weight Index.
The Inspire Corporate Bond Impact Equal Weight Index is comprised of 250 investment grade, intermediate term corporate bonds issued by some of the most inspiring large cap blue chip companies in the United States.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for IBD are 0.44%, which makes it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.47%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Cboeglobalmarketsinc.3.6501/12/27 accounts for about 1.75% of the fund's total assets, followed by Parkerhannifincorp.31/406/14/29 and Amphenolcorp.4.3506/01/29.
Its top 10 holdings account for approximately 12.85% of IBD's total assets under management.
Performance and Risk
The ETF has lost about -8.57% so far this year and is down about -10.43% in the last one year (as of 09/14/2022). In the past 52-week period, it has traded between $22.99 and $26.38.
The fund has a beta of 0.17 and standard deviation of 8.16% for the trailing three-year period. With about 251 holdings, it effectively diversifies company-specific risk.
Alternatives
Inspire Corporate Bond ETF is not a suitable option for investors seeking to outperform the Investment Grade Corporate Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares ESG Aware MSCI EAFE ETF (ESGD - Free Report) tracks MSCI EAFE ESG Focus Index and the iShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index. IShares ESG Aware MSCI EAFE ETF has $6.31 billion in assets, iShares ESG Aware MSCI USA ETF has $22.10 billion. ESGD has an expense ratio of 0.20% and ESGU charges 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Investment Grade Corporate Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Inspire Corporate Bond ETF (IBD) a Strong ETF Right Now?
Designed to provide broad exposure to the Investment Grade Corporate Bond ETFs category of the market, the Inspire Corporate Bond ETF (IBD - Free Report) is a smart beta exchange traded fund launched on 07/10/2017.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Inspire. IBD has been able to amass assets over $246.45 million, making it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Inspire Corporate Bond Impact Equal Weight Index.
The Inspire Corporate Bond Impact Equal Weight Index is comprised of 250 investment grade, intermediate term corporate bonds issued by some of the most inspiring large cap blue chip companies in the United States.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for IBD are 0.44%, which makes it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.47%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Cboeglobalmarketsinc.3.6501/12/27 accounts for about 1.75% of the fund's total assets, followed by Parkerhannifincorp.31/406/14/29 and Amphenolcorp.4.3506/01/29.
Its top 10 holdings account for approximately 12.85% of IBD's total assets under management.
Performance and Risk
The ETF has lost about -8.57% so far this year and is down about -10.43% in the last one year (as of 09/14/2022). In the past 52-week period, it has traded between $22.99 and $26.38.
The fund has a beta of 0.17 and standard deviation of 8.16% for the trailing three-year period. With about 251 holdings, it effectively diversifies company-specific risk.
Alternatives
Inspire Corporate Bond ETF is not a suitable option for investors seeking to outperform the Investment Grade Corporate Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares ESG Aware MSCI EAFE ETF (ESGD - Free Report) tracks MSCI EAFE ESG Focus Index and the iShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index. IShares ESG Aware MSCI EAFE ETF has $6.31 billion in assets, iShares ESG Aware MSCI USA ETF has $22.10 billion. ESGD has an expense ratio of 0.20% and ESGU charges 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Investment Grade Corporate Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.