GIGB vs LQD

GIGBAGoldman Sachs Access Investment Grade Corporate Bond ETF

LQDAiShares iBoxx $ Investment Grade Corporate Bond ETF

In short

GIGB Most investment-grade corporate bond funds just buy the biggest borrowers. Goldman's index screens the market on liquidity and fundamentals first, then spreads the money across roughly 1,600 bonds for 0.08% a year.

LQD One of the first bond ETFs ever launched (2002) and still the ticker traders reach for on corporate credit. Its index takes only big, widely held investment-grade bonds, so you own the liquid end of the market.

Stated mandate

GIGB The Fund seeks to track the FTSE Goldman Sachs Investment Grade Corporate Bond Index, which measures U.S.-dollar-denominated investment-grade corporate bonds meeting liquidity and fundamental screening criteria.

LQD The fund seeks to track an index of U.S. dollar-denominated investment-grade corporate bonds.

Why people hold it

• GIGB Costs 0.08% a year, well under the typical investment-grade corporate bond ETF's 0.19%.
• The index screens US dollar investment-grade corporates for liquidity and fundamentals rather than simply following who borrowed the most.gsam.com
• Tracks that index about as tightly as passive bond funds get, and holds roughly 1,600 bonds so no single issuer carries the load.
• Pays monthly, matching how corporate bond coupons tend to land in a portfolio.

• LQD Costs 0.14% a year, under the 0.19% median for investment-grade corporate bond funds in its group.
• The index is a liquidity filter: bonds need $750M+ outstanding from issuers with $2B+ of debt, and no single issuer gets more than 3% of the basket.ihs.com
• Running since 2002 and now a multi-billion-dollar fund that trades heavily, so getting in and out is rarely the hard part.
• Tracks its benchmark closely, which is the entire job of an index bond fund, and pays interest monthly.

Worth knowing

• GIGB Cheap, but not the cheapest shelf: VCIT, USIG and SPIB run at 0.03% to 0.04%. You are paying a few basis points for the screening.
• Broad-maturity corporate credit moves on two levers, interest rates and credit spreads, so it swings more than short-dated bond funds.
• A mid-sized, moderately traded fund rather than a giant, so trading spreads can run wider than the largest names in the category.

• LQD Rivals run cheaper: VCIT, USIG, SPIB, IGIB and IGSB all charge 0.03% to 0.04%. You pay up here for the liquid-index rules and the trading depth.
• The index holds bonds with at least three years left and no maturity ceiling, so long-dated debt is in the mix and prices swing more when rates move.ihs.com
• This is corporate credit, not Treasuries. The rating floor is the bottom rung of investment grade (BBB-/Baa3), so credit spreads are part of the ride.ihs.com

Full GIGB profile⁠

Full LQD profile⁠