Avoid Duration Bets Like LQD
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The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) has underperformed due to its long duration and sensitivity to rate changes amidst inflation. Credit spreads are low, offering no margin of safety, and market concerns about potential inflationary policies are impacting rates.
December 30, 2024 | 1:15 am
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The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) is underperforming due to its long duration and sensitivity to rate changes amidst inflation. Low credit spreads offer no margin of safety.
LQD's long duration makes it sensitive to rate changes, which are currently under upward pressure due to inflation concerns. Additionally, low credit spreads provide no margin of safety, increasing risk for investors.
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