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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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Inspire. IBD has been able to amass assets over $257.15 million, making it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. IBD seeks to match the performance of the Inspire Corporate Bond Impact Equal Weight Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.44% for IBD, making it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.69%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Cboeglobalmarketsinc.3.6501/12/27 accounts for about 1.75% of total assets, followed by Parkerhannifincorp.31/406/14/29 and Amphenolcorp.4.3506/01/29.
The top 10 holdings account for about 12.85% of total assets under management.
Performance and Risk
Year-to-date, the Inspire Corporate Bond ETF has lost about -9.38% so far, and is down about -9.68% over the last 12 months (as of 11/16/2022). IBD has traded between $22.24 and $25.92 in this past 52-week period.
The fund has a beta of 0.17 and standard deviation of 8.33% 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 $6.72 billion in assets, iShares ESG Aware MSCI USA ETF has $20.47 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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Inspire. IBD has been able to amass assets over $257.15 million, making it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. IBD seeks to match the performance of the Inspire Corporate Bond Impact Equal Weight Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.44% for IBD, making it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.69%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Cboeglobalmarketsinc.3.6501/12/27 accounts for about 1.75% of total assets, followed by Parkerhannifincorp.31/406/14/29 and Amphenolcorp.4.3506/01/29.
The top 10 holdings account for about 12.85% of total assets under management.
Performance and Risk
Year-to-date, the Inspire Corporate Bond ETF has lost about -9.38% so far, and is down about -9.68% over the last 12 months (as of 11/16/2022). IBD has traded between $22.24 and $25.92 in this past 52-week period.
The fund has a beta of 0.17 and standard deviation of 8.33% 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 $6.72 billion in assets, iShares ESG Aware MSCI USA ETF has $20.47 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.