Yahoo Finance Is Inspire Corporate Bond ETF (IBD) a Strong ETF Right Now?
The Inspire Corporate Bond ETF (IBD) made its debut on 07/10/2017, and is a smart beta exchange traded fund that provides broad exposure to the Investment Grade Corporate Bond ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
The fund is managed by Inspire, and has been able to amass over $253.58 million, which makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. Before fees and expenses, this particular fund 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.45%.
IBD's 12-month trailing dividend yield is 3.53%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Vanecketftrust accounts for about 1.48% of total assets, followed by Devonenergycorp. And Devonenergycorp.
IBD's top 10 holdings account for about 5.69% of its total assets under management.
Performance and Risk
The ETF has added about 0.07% and was up about 5.55% so far this year and in the past one year (as of 03/14/2024), respectively. IBD has traded between $22.22 and $23.99 during this last 52-week period.
The fund has a beta of 0.22 and standard deviation of 5.83% for the trailing three-year period. With about 248 holdings, it effectively diversifies company-specific risk.
Alternatives
Inspire Corporate Bond ETF is a reasonable option for investors seeking to outperform the Investment Grade Corporate Bond ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) tracks ---------------------------------------- and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. JPMorgan Nasdaq Equity Premium Income ETF has $11.13 billion in assets, iShares ESG Aware MSCI USA ETF has $13.72 billion. JEPQ has an expense ratio of 0.35% 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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Inspire Corporate Bond ETF (IBD): ETF Research Reports
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): ETF Research Reports
