Among the numerous bond exchange-traded funds (ETFs), the ones issued by corporations have become pretty popular in the past few years. This is because when compared to government bond ETFs, such investments render better returns. Moreover, they are safer than stocks and if the company were to go bankrupt, it will first pay off its bonds, even before they settle the dues with the stockholders. However, corporate bond ETFs still bear an elevated risk than any other form of ETFs.

Popular types of corporate bond ETFs in the country
At the moment, investment-grade and high-yield are some popular types of corporate bond ETFs in the country, they are explained in detail below:

• Investment-grade ETFs – These types of corporate bond ETFs have extraordinary credit ratings which suggest that they carry a low investment risk. However, the return on investment-grade corporate bond ETFs is comparatively lower than the high-yield ETFs. If you want to be prudent while diversifying your portfolio, then you should opt for investment-grade corporate bond ETFs.
• Junk or high-yield ETFs – Unlike investment-grade ETFs, junk ETFs deliver higher yields. However, they have lower credit ratings, implying that there is a magnified level of risk for the investor. If your priority is to make profits, you can invest in a high-yield corporate bond ETF. However, just ensure that you scrutinize the product’s performance, the rate of return, and level of risk involved.

Top investment-grade US corporate bond ETFs
If you are new at dealing with bonds, then it is better to choose investment-grade corporate bond ETFs as they are comparatively more secure. Below are the top 3 US corporate bond ETFs in the country:

• iShares iBoxx $ Investment-Grade Corporate Bond ETF (LQD) –   The iShares iBoxx $ Investment-Grade Corporate Bond ETF is issued by BlackRock, which currently handles assets worth approximately $37 billion. Since its origin in 2002, it has a large number of US corporate bond ETFs and offers an average rate of return of 5.68%. This fund tracks the Markit iBoxx USD Liquid Investment-Grade Index and invests nearly 90% of the assets into indexed securities and 10% in cash funds. At the moment, there are roughly 1800 holdings, most of which are involved in finance and consumer-oriented industries. Some of their recognized issuers include Bank of America Corp, GE Capital International Holdings Corporation, Goldman Sachs Group, JP Morgan Chase & Co, Microsoft Corporation, Verizon Communications, and Wells & Fargo Company. iShares iBoxx $ Investment-Grade Corporate Bond ETF is known for delivering a strong performance and a low expense ratio, which makes it an ideal pick for investors. Depending on the investment intervals, the respective return rates on corporate bond ETF are 5.59% for 1 year, 2.25 % for 3 years, and 3.57% for 5 years.
• Vanguard Short-Term Corporate Bond ETF (VCSH) –   With almost $26 billion assets under its management, the Vanguard Short-Term Corporate Bond ETF (VCSH) is one of the most popular US corporate bond ETFs. Usually, its short-term bonds mature anywhere between 1 and 5 years. However, the returns it yields are relatively lower than long-term corporate bonds offered by Vanguard. However, one of the primary benefits of a short-term corporate bond is that it isn’t influenced much by the soaring interest rates. This particular fund tracks the Barclays U.S. 1-5 Year Corporate Bond Index, investing about 80% of its assets into benchmark indexed securities. For now, there are over 2,100 holdings and a majority of them happen to be companies with a financial or an industrial background. Some of their top issuers are Anheuser-Busch Inbev Finance, Oracle Corporation, Bank of America Corporation, CVS Health Corporation, Morgan Stanley, and GE Capital International Funding. Most investors opt for bonds that mature in 1 to 3 years or 3 to 5 years. Across different investment intervals, the Vanguard Short-Term Corporate Bond ETF (VCSH) delivers a rate of return of 0.60% for 1 year, 1.47% for 3 years, and 1.61% for 5 years.
• Vanguard Intermediate-Term Corporate Bond ETF (VCIT) –   Approximately $21 billion worth of assets in its funds, Vanguard Intermediate-Term Corporate Bond ETF (VCIT) applies an index-sampling tactic to match up to the benchmark index’s performance. It traces the Barclays U.S. 5-10 Year Corporate Bond Index and as of now has almost 1740 holdings that mostly comprise companies belonging to sectors like finance, consumer goods and services, and energy. Some of their issuers are Anheuser-Busch Inbev Finance, CVS Health Corporation, United States Treasury Notes, Vodafone Group Plc, Bank of America Corporation, and Broadcom Corporation. Like Vanguard Short-Term Corporate Bond ETF (VCSH), this US corporate bond ETF also invests 80% of its total assets in the indexed bonds. The annualized rate of returns projected for every investment interval is 1.18% for 1 year, 2.20% for 3 years, and 2.81% for 5 years.

Other ETF options
Apart from the top three US corporate bond ETFs, you can also check the following investments:

• iShares Floating Rate Bond ETF (FLOT)
• iShares Short-Term Corporate Bond ETF (IGSB)
• iShares Intermediate-Term Corporate Bond ETF (IGIB)
• SPDR Portfolio Short-Term Corporate Bond ETF (SPSB)
• SPDR Barclays Capital Investment-Grade Floating Rate ETF (FLRN)