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Is Inspire Corporate Bond ETF (IBD) a Strong ETF Right Now?
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Making its debut on 07/10/2017, smart beta exchange traded fund Inspire Corporate Bond ETF (IBD - Free Report) provides investors broad exposure to the Investment Grade Corporate Bond ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $366.33 million, this makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. IBD is managed by Inspire. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
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 3.87%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Alexandria Real Estate Equities Inc. 4.9 12/15/30 (015271AU3) accounts for about 1.70% of the fund's total assets, followed by Devon Energy Corp. 5.85 12/15/25 (25179MAV5) and Trimble Inc 4.9 06/15/28 (896239AC4).
IBD's top 10 holdings account for about 16.67% of its total assets under management.
Performance and Risk
The ETF has added roughly 5.38% and was up about 10.04% so far this year and in the past one year (as of 09/19/2024), respectively. IBD has traded between $22.22 and $24.28 during this last 52-week period.
The fund has a beta of 0.23 and standard deviation of 6.04% 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 USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ----------------------------------------. IShares ESG Aware MSCI USA ETF has $13.15 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $16.11 billion. ESGU has an expense ratio of 0.15% and JEPQ charges 0.35%.
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?
Making its debut on 07/10/2017, smart beta exchange traded fund Inspire Corporate Bond ETF (IBD - Free Report) provides investors broad exposure to the Investment Grade Corporate Bond ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $366.33 million, this makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. IBD is managed by Inspire. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
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 3.87%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Alexandria Real Estate Equities Inc. 4.9 12/15/30 (015271AU3) accounts for about 1.70% of the fund's total assets, followed by Devon Energy Corp. 5.85 12/15/25 (25179MAV5) and Trimble Inc 4.9 06/15/28 (896239AC4).
IBD's top 10 holdings account for about 16.67% of its total assets under management.
Performance and Risk
The ETF has added roughly 5.38% and was up about 10.04% so far this year and in the past one year (as of 09/19/2024), respectively. IBD has traded between $22.22 and $24.28 during this last 52-week period.
The fund has a beta of 0.23 and standard deviation of 6.04% 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 USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ----------------------------------------. IShares ESG Aware MSCI USA ETF has $13.15 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $16.11 billion. ESGU has an expense ratio of 0.15% and JEPQ charges 0.35%.
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.