14 Best Index Funds for a Low-Priced Portfolio – Kiplinger’s Personal Finance

The world of exchange-traded funds (ETFs) has been growing in popularity over the past few decades. While there are a seemingly endless number of ETFs for investors to choose from, index funds have emerged as some of the most sought-after thanks in part to their lower fees and wider diversity of stock selection.

Index funds seek to track the return of a broader benchmark like the Dow Jones Industrial Average or a subset of the market such as small-cap growth stocks or healthcare. 

Among the most popular is the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 Index and currently has around $430 billion in assets under management. 

“SPY remains king of the ETF market,” says Todd Rosenbluth, head of ETF & Mutual Fund Research for independent research firm CFRA. “SPY was the first of the U.S.-listed ETFs and 28 years later is still the biggest.”

Even Berkshire Hathaway (BRK.B) CEO Warren Buffett is a believer in buying index funds. SPY shares are a part of the Berkshire Hathaway portfolio, and at the company’s annual shareholder meeting earlier this year, Buffett said, “I recommend the S&P 500 index fund, and have for a long, long time.”

Not all index funds are built the same, however, so where should an investor start?

One solution is to look for funds that are highly rated, have low fees and that have delivered for investors over the long haul. 

Here are 14 index funds that stand out. This is a wide selection of funds that investors can choose from, including those with exposure to large-cap stocks, real estate and international firms. Read on to discover which one or ones might work best for your investment goals.

Data is as of Nov. 8. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

1 of 14

Vanguard Large-Cap ETF

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  • Type: Large-cap blend
  • Assets under management: $27.8 billion 
  • Morningstar rating: 5 stars
  • 3-year annualized total return: 21.6%
  • 5-year annualized total return: 19.7%
  • 10-year annualized total return: 16.4%
  • Dividend yield: 1.2%
  • Expense ratio: 0.04%, or $4 annually for every $10,000 invested

The Vanguard Large-Cap ETF (VV, $219.63) tracks the performance of the CRSP US Large Cap Index, a diversified collection of large-cap U.S. stocks that captures 85% of the U.S. market capitalization. The index fund has been in existence since January 2004 and is rated highly at Morningstar.

VV is a very large-cap fund. Large caps traditionally start at $10 billion in market cap, but the median market cap of VV’s holdings is $177.4 billion. To get an idea for valuation, its holdings’ average price-to-earnings (P/E) and price-to-book (P/B) ratios are 24.6x and 4.4x, respectively. And the average annual earnings growth rate for stocks in the portfolio over the past five years is 19.6%.

The average expense ratio of similar funds is 0.82%, or approximately 20 times higher than VV. One of the ways VV is able to keep fees attractive is through a low turnover. As of Dec. 31, 2020, the turnover rate for this index fund was just 3.0%, which theoretically means that it would take about 33 years for the entire portfolio to be turned over.

As for the fund’s specific holdings, the top 10 account for 27.7% of the total portfolio, with Apple (AAPL), Microsoft (MSFT) and Alphabet (GOOGL) the biggest positions as of Sept. 30. Technology is by far the larger sector representation with a weighting of 30.1%. The second-highest sector weighting is consumer discretionary (16.0%), with healthcare and industrials tied in third at 12.7% apiece.

For those interested in dividend income, VV has an average dividend yield of 1.2%. That’s slightly less than the category average of 1.5%.

A $10,000 investment in Vanguard Large-Cap ETF a decade ago is worth approximately $46,789 today – almost $10,000 more than the large-cap blend category.

Learn more about VV at the Vanguard provider site.

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Vanguard Growth ETF

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  • Type: Large-cap growth
  • Assets under management: $90.8 billion
  • Morningstar rating: 4 stars
  • 3-year annualized total return: 29.8%
  • 5-year annualized total return: 25.3%
  • 10-year annualized total return: 19.0%
  • Dividend yield: 0.5%
  • Expense ratio: 0.04%

The Vanguard Growth ETF (VUG, $322.01) tracks the CRSP US Large Cap Growth Index, which differs from VV’s index in that it uses factors such as future long- and short-term earnings per share (EPS) growth, three-year historical EPS growth, three-year historical sales per share growth, return on assets and current investment-to-assets ratio to determine its holdings.

Because it is growth-focused, the index fund’s holdings are more expensive than those in Vanguard’s large-cap blend fund. For example, its P/E and P/B ratios are much higher at 37.8x and 10.4x, respectively. But it’s a growthier fund – its five-year average annual earnings growth rate is 28.8%, which is 920 basis points higher than VV (a basis point is one-one hundredth of a percentage point).

But even though its valuation multiples are higher, its annual turnover is still a low 6% through December 2020.

This ETF held 287 stocks as of the end of September. The median market cap of those holdings is $305.7 billion. The top three sectors by weighting are technology (48.2%), consumer discretionary (24.0%) and industrials (11.5%). VUG’s top 10 holdings account for 47.7% of the fund’s assets compared to 27.7% for VV. The top three holdings should be familiar, though: They’re Apple, Microsoft and Alphabet. 

As is expected with growth stocks, VUG’s dividend yield is just 0.5%. Thus, an investment in this index fund is primarily about capital appreciation and not income. It does deliver on the appreciation front, however. The fund’s inception date is Jan. 26, 2004 – one day before VV. Since then, a $10,000 investment in VUG has become $62,309, nearly $13,650 greater than its peers in the large-cap growth category.

Learn more about VUG at the Vanguard provider site.

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Schwab U.S. Dividend Equity ETF

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  • Type: Large-cap value
  • Assets under management: $30.5 billion 
  • Morningstar rating: 5 stars
  • 3-year annualized total return: 18.9%
  • 5-year annualized total return: 17.1%
  • 10-year annualized total return: 15.1%
  • Dividend yield: 2.9%
  • Expense ratio: 0.06%

The first thing you’ll notice about the Schwab U.S. Dividend Equity ETF (SCHD, $78.83) is that it has a dividend yield of 2.9%, more than double the S&P 500.

The ETF tracks the performance of the Dow Jones U.S. Dividend 100 Index. The index – a subset of the Dow Jones U.S. Broad Market Index – is a collection of high dividend-yielding U.S. stocks that consistently pay dividends and are financially strong relative to their peers.

To be included in the 100-stock index, a company must have paid dividends for at least 10 consecutive years, have a minimum float-adjusted market cap of $500 million and meet specific liquidity requirements.

Companies making the list are evaluated based on four fundamental factors: cash flow to total debt, return on equity, dividend yield and the five-year dividend growth rate. The stocks included in the index are rebalanced quarterly and reconstituted annually. No stock can have more than a 4% weighting, and no sector can represent more than 25% of the index.

In existence since October 2011, the ETF’s weighted average market capitalization is $120.5 billion. The typical holding has a 30.7% return on equity, a 16.6x price-to-earnings ratio and a price-to-cash flow of 13.1x.

Of SCHD’s holdings, the top 10 account for 40.0% of the assets under management, and are led by Broadcom (AVGO) at 4.4%, as well as Merck (MRK) and Home Depot (HD) at 4.3% apiece. The top three sectors by weighting are financials (22.4%), technology (20.7%) and consumer staples (13.9%). 

SCHD leans large, too. Almost two-thirds of the stocks in the ETF have a market cap greater than $70 billion.

Learn more about SCHD at the Schwab provider site.

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Vanguard Mid-Cap ETF

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  • Type: Mid-cap blend
  • Assets under management: $56.7 billion
  • Morningstar rating: 5 stars
  • 3-year annualized total return: 20.2%
  • 5-year annualized total return: 17.3%
  • 10-year annualized total return: 14.9%
  • Dividend yield: 1.1%
  • Expense ratio: 0.04%

The Vanguard Mid-Cap ETF (VO, $258.71) is one of the top mid-cap funds available. Only the iShares Core S&P Mid-Cap ETF (IJH) has more assets under management. However, IJH only gets a four-star rating from Morningstar.

VO tracks the performance of the CRSP US Mid Cap Index, a collection of stocks that fall within the top 70%-85% of investable market capitalization. The stocks in the index are reconstituted quarterly on the third Friday of March, June, September and December.

This Vanguard ETF has 379 stocks, slightly more than the index itself at 371. The holdings have a median market cap of $25.6 billion – larger than what you’d imagine from a mid-cap fund (mid caps typically fall in the $2 billion to $10 billion market-cap range), but still considerably smaller than the three large-cap index funds mentioned previously. 

The average five-year earnings growth rate is 13.5%, with price-to-earnings and price-to-book ratios of 23.8x and 3.4x, respectively.

Sector-wise, technology stocks make up the largest portion, with a weighting of 18.7%. The second-largest by weight is industrials at 15.4%, while consumer discretionary stocks are a close third at 14.9%.

If you’re unsure about investing in smaller, mid-cap stocks, the top 10 holdings account for just 6.7% of the portfolio. This means the $56.7 billion in assets are spread evenly throughout the portfolio rather than focused on the top 10. The ETF’s top three holdings by weighting are DexCom (DXCM) at 0.8%, while Marvell Technology (MRVL) and MSCI (MSCI) account for 0.7% each. 

A $10,000 investment in VO a decade ago is worth $42,710 today – almost 35% higher than its mid-cap blend peers. 

Learn more about VO at the Vanguard provider site.

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Vanguard Small-Cap ETF

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  • Type: Small-cap blend
  • Assets under management: $51.8 billion
  • Morningstar rating: 5 stars
  • 3-year annualized total return: 18.0%
  • 5-year annualized total return: 17.0%
  • 10-year annualized total return: 14.5%
  • Dividend yield: 1.1%
  • Expense ratio: 0.05%

A well-diversified portfolio might include a fund like the Vanguard Small-Cap ETF (VB, $239.37) to act as a counter-balance to the large-cap positions held by investors.

VB tracks the performance of the CRSP U.S. Small Cap Index, a group of smaller companies that represent the bottom 2% to 15% of the domestic investable market cap. The index is reconstituted quarterly on the third Friday in March, June, September and December.

Between 2011 and 2020, the ETF’s highest quarterly return was 27.1% in the fourth quarter of 2020. Conversely, the lowest quarterly return was -30.1% in Q1 2020.

While the ETF is considered a small-cap blend, the reality is that 43.0% of the holdings are mid-cap stocks, with small caps (typically those companies with a market cap of $2 billion or less) accounting for 49.3%, micro-cap stocks another 7.3% and a tiny sliver (0.4%) of large caps.

The fund has a total of 1,527 stocks with a median market cap of $6.2 billion and a five-year earnings growth rate of 11.0%. It turns the entire portfolio once every 4.5 years.

The top three sectors by weighting are industrials (18.4%), consumer discretionary (15.8%) and financials (14.8%). The top 10 holdings account for just 3.1% of the fund’s $51.8 billion in assets. One of the current top 10 holdings is Nuance Communications (NUAN), which is is in the process of being acquired by Microsoft for $19.7 billion.

Learn more about VB at the Vanguard provider site.

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Vanguard Real Estate ETF

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  • Type: Real Estate
  • Assets under management: $46.5 billion
  • Morningstar rating: 3 stars
  • 3-year annualized total return: 14.9%
  • 5-year annualized total return: 10.8%
  • 10-year annualized total return: 10.8%
  • Dividend yield: 2.5%
  • Expense ratio: 0.12%

If you’re interested in investing in U.S. real estate companies, the Vanguard Real Estate ETF (VNQ, $109.89) is an excellent place to start. The fund tracks the MSCI US Investable Market Real Estate 25/50 Index, a collection of real estate stocks across the market-cap spectrum.

The “25” in 25/50 means that no one stock can account for more than 25% of the index. The “50” represents the companies weighted at more than 5% cannot add up to more than 50% of the index’s value. The index is rebalanced quarterly after the last business day in February, May, August and November.

Of the 169 stocks held by VNQ, almost all of them are real estate investment trusts (REITs). The top three REIT sectors by weighting are specialized REITs (37.6%), residential REITs (14.9%) and industrial REITs (11.0%).

The top 10 holdings account for 44.8% of the fund’s assets. The number one holding isn’t a stock. Instead, it’s the Vanguard Real Estate II Index Fund Institutional Plus Shares (VRTPX). The mutual fund has $9.0 billion in assets under management and also invests primarily in REITs. At the end of September, VRTPX accounted for 11.5% of VNQ.

The following three largest REITs by weighting are telecom REIT American Tower (AMT) at 7.2%, industrial park giant Prologis (PLD) at 5.5%, and cell tower operator Crown Castle International (CCI) at 4.4%.

The average market cap of the index fund is $22.5 billion. Large-cap stocks account for 33.0% of the portfolio. Mid-caps represent 47.6%, while small and micro-cap stocks account for the remaining 19.2%. 

Many real estate investors are looking for income and capital appreciation. VNQ’s dividend yield is currently 2.5%.

Learn more about VNQ at the Vanguard provider site.

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VanEck Semiconductor ETF

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  • Type: Technology
  • Assets under management: $7.1 billion
  • Morningstar rating: 5 stars
  • 3-year annualized total return: 47.9%
  • 5-year annualized total return: 36.2%
  • 10-year annualized total return: 26.8%
  • Dividend yield: 0.6%
  • Expense ratio: 0.35%

As its name implies, the VanEck Semiconductor ETF (SMH, $301.94) invests in companies involved in semiconductor production and equipment.

The ETF tracks the performance of the MVIS US Listed Semiconductor 25 Index, a collection of 25 of the largest and most liquid U.S.-listed semiconductor stocks. To be eligible for inclusion in the index, a company must generate at least 50% of its revenue from semiconductors or semiconductor equipment. Thus, of the 50 largest by market cap, the top 25 are included in the index.

Whether you’re looking at the near term or the long term, SMH remains a highly rated index fund by Morningstar. It has five stars overall currently, and has maintained this top rating over the past three and five years.

The fund’s fees are very moderate for a sector ETF. Over the past 10 years, you would have paid just $443 in fees on a $10,000 investment. That investment is worth $115,089 today, 71% higher than the broader technology sector.

According to its prospectus, as of Dec. 31, 2020, the market caps of stocks held by the fund ranged from a low $10.8 billion to a high $565.5 billion. The current weighted average market cap is $261.1 billion.

As for the portfolio’s composition, the top 10 holdings account for 67.7% of the fund’s assets, leaving 32.3% for the other 15 stocks. SMH’s three top holdings are Taiwan Semiconductor Manufacturing (TSM) at 14.8, Nvidia (NVDA) at 11.2%, and ASML Holding (ASML) at 6.9%. The U.S. accounts for 73.5% of the fund, with Taiwan (14.8%) and the Netherlands (9.7%) also making a big contribution.

Learn more about SMH at the VanEck provider site.

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iShares U.S. Medical Devices ETF

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  • Type: Healthcare
  • Assets under management: $8.9 billion
  • Morningstar rating: 5 stars
  • 3-year annualized total return: 22.1%
  • 5-year annualized total return: 23.8%
  • 10-year annualized total return: 21.3%
  • Dividend yield: 0.2%
  • Expense ratio: 0.41%

The healthcare sector will always attract interest from investors. For this reason, the iShares U.S. Medical Devices ETF (IHI, $65.32) has managed to attract almost $9 billion in assets since its inception in May 2006.

The fund tracks the performance of the Dow Jones U.S. Select Medical Equipment Index, a collection of medical equipment companies, including those that manufacture and distribute MRI (magnetic resonance imaging) scanners, prosthetics, pacemakers, X-ray machines and other non-disposable medical devices. 

IHI currently has 66 holdings. Its top 10 accounts for 71.1% of the portfolio. Of the holdings, 71.7% are healthcare equipment companies. Businesses that manufacture and provide life sciences tools and services account for another 27.8%, with a tiny amount dedicated to healthcare supplies.

The average market cap is $79.8 billion, with large caps accounting for 74.4% of the overall portfolio. The average stock in the portfolio has P/E and price-to-sales (P/S) ratios of 30.9x and 5.9x, respectively.

The fund’s top three holdings are Thermo Fisher Scientific (TMO) at 13.2%, Abbott Laboratories (ABT) at 12.3%, and Danaher (DHR) at 11.1%. The trio represents nearly 37% of the ETFs total assets.

IHI is more of a bet on the 10 largest medical equipment companies in the U.S. as it is a bet on the entire healthcare industry. 

Learn more about IHI at the iShares provider site.

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iShares MSCI Intl Quality Factor ETF

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  • Type: Foreign large-cap blend
  • Assets under management: $4.1 billion
  • Morningstar rating: 5 stars
  • 3-year annualized total return: 15.8%
  • 5-year annualized total return: 13.1%
  • 10-year annualized total return: N/A
  • Dividend yield: 1.8%
  • Expense ratio: 0.30%

You would think that a five-star fund like the iShares MSCI Intl Quality Factor ETF (IQLT, $40.41) would have more assets than $4.1 billion. But, in its defense, it’s only been around since its launch in January 2015.

The ETF tracks the performance of the MSCI World ex USA Sector Neutral Quality Index. The index is based on its parent index, the MSCI World ex USA Index, which covers 85% of the developed world’s market capitalization, excluding the U.S.

The methodology for IQLT’s benchmark index involves rating each of the companies in the parent index based on quality characteristics such as high return on equity, stable earnings growth and low levels of debt.

Each company’s quality score is multiplied by its weight in the parent to establish its weight in the MSCI World ex USA Sector Neutral Quality Index. The index is rebalanced twice a year. No stock can have more than a 5% weighting after each rebalancing.

The index fund currently has 294 holdings. The average stock held by IQLT has an average market cap of $53.7 billion, almost $6.0 billion higher than its benchmark index. All but 10.2% of the holdings are large-cap stocks.   

The three top sectors in IQLT are financials (18.3%), industrials (15.8%) and healthcare (12.1%). The top 10 holdings account for 24.5% of the fund’s total assets. The three top holdings are ASML Holding (4.8%), Roche Holding (RHHBY) at 3.8%, and Nestle (NSRGY) at 3.5%.

Learn more about IQLT at the iShares provider site.

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Vanguard FTSE All-World ex-US Small-Cap ETF

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  • Type: Foreign small/mid-cap value
  • Assets under management: $10.1 billion
  • Morningstar rating: 3 stars
  • 3-year annualized total return: 13.4%
  • 5-year annualized total return: 10.7%
  • 10-year annualized total return: 8.0%
  • Dividend yield: 2.3%
  • Expense ratio: 0.11% 

The Vanguard FTSE All-World ex-US Small-Cap ETF (VSS, $140.12) is one way to gain exposure to small-cap stocks outside the U.S. without having to buy individual American depositary receipt (ADRs) listed in the U.S. or trading over-the-counter.

The ETF tracks the performance of the FTSE Global Small Cap ex US Index. The index provides exposure to small-caps in both developed and emerging markets. It currently measures the performance of 4,190 small-cap stocks in 49 markets.

Emerging markets account for 23.5% of the index fund’s assets in terms of regional allocations, while developed markets account for 76.5%. The three top countries by weighting are Canada (15.0%), Japan (13.8%) and the U.K. (10.3%). The top three sectors by weighting are industrials (18.8%), technology (14.8%) and consumer cyclical (12.6%).

The ETF’s top 10 holdings account for 3.3% of the fund’s total assets. The top three companies held by VSS by weighting are construction firm WSP Global (0.43%), cybersecurity specialist Open Text (OTEX) at 0.40%, and Lightspeed Commerce (LSPD) at 0.38% – each of which is based in Canada.

The average market cap of the fund’s holdings is $2.1 billion, considerably less than the index’s average market cap of $8.6 billion. Much like VB mentioned earlier, mid-caps and large caps account for almost two-thirds of the ETF’s total assets. As a result, the average holding has P/E and P/S ratios of 12.8x and 1.0x, respectively.

VSS turns the entire portfolio once every 4.5 years. 

Learn more about VSS at the Vanguard provider site.

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iShares ESG Aware MSCI EM ETF

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  • Type: Diversified emerging markets
  • Assets under management: $6.9 billion
  • Morningstar rating: 4 stars
  • 3-year annualized total return: 12.1%
  • 5-year annualized total return: 10.1%
  • 10-year annualized total return: N/A
  • Dividend yield: 1.4%
  • Expense ratio: 0.25% 

Combining emerging markets with ESG (environmental, social, and governance) factors has been very successful for iShares. Launched in June 2016, the iShares ESG Aware MSCI EM ETF (ESGE, $42.21) has gathered $6.9 billion from investors in a little over five years.

That’s impressive.

The ETF tracks the performance of the MSCI Emerging Markets Extended ESG Focus Index, a collection of emerging markets’ companies that have favorable ESG characteristics while also possessing good risk and return characteristics of its parent index, the MSCI Emerging Markets Index.

Companies excluded from the index include tobacco producers, manufacturers of controversial weapons, makers and retailers of guns, coal producers, coal-based utilities, and oil sands operators.

The index tracks the performance of 24 emerging markets, including China, India, Brazil, Russia and South Korea.

ESGE consists of 344 stocks with an average MSCI ESG Quality Score of 7.9 out of 10. Its ESG Quality Score is better than 97.8% of the 1,245 funds in its peer group.  

The ETF’s top 10 holdings account for 25% of ITS net assets. The average market cap is $45.5 billion with P/E and P/S ratios of 12.8x and 1.6x, respectively. Large-cap stocks account for slightly less than 87% of the fund’s total assets.

The top three sectors by weighting are financials (24.2%), technology (21.2%) and consumer discretionary (15.1%). The top three country weightings are China (31.3%), Taiwan (16.4%), and South Korea (12.0%).  

Learn more about ESGE at the iShares provider site.

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iShares Broad USD High Yield Corporate Bond ETF

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  • Type: High-yield bond
  • Assets under management: $8.5 billion
  • Morningstar rating: 4 stars
  • 3-year annualized total return: 7.1%
  • 5-year annualized total return: N/A
  • 10-year annualized total return: N/A
  • SEC yield: 4.1%*
  • Expense ratio: 0.15%

The iShares Broad USD High Yield Corporate Bond ETF (USHY, $41.45) tracks the performance of the ICE BofA US High Yield Constrained Index. The index is a broad representation of the U.S. dollar-denominated high yield corporate bond market. It provides investors with a larger portfolio yield when the U.S. Treasury yields are near historic lows.

There is a 2% cap on each bond with no limit on the number of bonds in the index. USHY currently has 2,151 bonds in the portfolio. Most of the issuers of the bonds are located in the U.S.  

The top 10 issuers account for 11.6% of the portfolio. The top three sectors by weight are consumer cyclicals (19.6%), communications (16.0%) and consumer non-cyclical (13.8%). The top three corporate bonds are from Occidental Petroleum (OXY) at 2.`%, privately held CCO Holdings at 1.5%, and Kraft Heinz (KHC) at 1.4%.

The majority (52%) of the bonds are rated the highest level of junk, BB, while another 35% are B-rated. CCC ratings account for 11% of the portfolio, while 1% of the bonds arrive below CCC or are not rated. Another 1% are actually investment-grade BBB.

USHY has a weighted average coupon of 5.7% and a weighted average maturity of 4.8 years. Its duration, a measure of bond risk, is 4.1 years, implying that a 1-percentage-point rise in rates would see USHY’s value decline by 4.1%. (Yields and prices move in opposite directions.)

Learn more about USHY at the iShares provider site.

* SEC yields reflect the interest earned after deducting fund expenses for the most recent 30-day period and are a standard measure for bond and preferred-stock funds.

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iShares 5-10 Year Investment Grade Corporate Bond ETF

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  • Type: Corporate bond
  • Assets under management: $11.9 billion
  • Morningstar rating: 3 stars
  • 3-year annualized total return: 7.9%
  • 5-year annualized total return: 4.7%
  • 10-year annualized total return: 3.9%
  • SEC yield: 2.2%
  • Expense ratio: 0.06%

As the name implies, the iShares 5-10 Year Investment Grade Corporate Bond ETF (IGIB, $59.94) provides investors with exposure to intermediate-term U.S. investment-grade corporate bonds.

It tracks the performance of the ICE BofA 5-10 Year US Corporate Index, a collection of investment-grade corporate bonds issued by U.S. and non-U.S. companies and denominated in U.S. dollars. The remaining maturity of the bonds in the index is greater than or equal to five years and less than 10 years.

The term “investment grade” is defined as anything rated BBB or better by Fitch Ratings, Baa or better by Moody’s Investors Service and BBB or better by Standard & Poor’s Financial Services.

Since the fund’s inception in January 2007, it has had an annual return of 4.7% through Sept. 30, 2021.

The ETF’s top 10 issuers account for 13.7% of the fund’s total net assets. The three largest sectors by weighting are banking (20.8%), consumer non-cyclical (12.5%) and technology (9.3%). The three top company issuers are Bank of America (BAC) at 2.6%, JPMorgan Chase (JPM) at 2.0%, and Morgan Stanley (MS) at 1.5%.

In terms of credit quality, 56.1% of the bonds are BBB-rated, 37.1% are A-rated, 5.0% are AA rated and 0.5% are AAA. A marginal 0.3% are in junk territory.

The fund has a weighted average coupon of 3.3%, a weighted average maturity of 7.42 years and an effective duration of 6.45 years.

Learn more about IGIB at the iShares provider site.

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Vanguard Short-Term Corporate Bond ETF

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  • Type: Short-term bond
  • Assets under management: $42.9 billion
  • Morningstar rating: 4 stars
  • 3-year annualized total return: 4.3%
  • 5-year annualized total return: 2.8%
  • 10-year annualized total return: 2.8%
  • SEC yield: 1.1%
  • Expense ratio: 0.05% 

The Vanguard Short-Term Corporate Bond ETF (VCSH, $81.99) tracks the performance of the Bloomberg Barclays U.S. 1-5 Year Corporate Bond Index. The bonds included in this index are U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities with maturities between one and five years.

Due to the short-term nature of the index fund, it has a 56% turnover, which means it turns the entire portfolio every 27 months. 

VCSH was launched in November 2009. Since its inception, it’s generated a 3.0% annual return through Oct. 31. 

The fund owns 2,313 bonds with a weighted average coupon of 3.1%, an average effective maturity of 3.0 years and an effective duration of 2.8 years. The financial services sector accounts for 43.7% of the fund’s net assets, industrial companies make up 51.0%, and the rest are primarily utilities. 

Approximately 46.2% of the bonds are BBB-rated. The rest are rated A or better.

The top 10 holdings account for just 2% of the fund’s $42.9 billion in net assets.

Learn more about VCSH at the Vanguard provider site.