The fund tracks the FTSE Goldman Sachs Investment Grade Corporate Bond Index and uses a selection process that excludes the weakest companies based on key metrics such as operating margin and leverage ratio. In doing so, it aims to proactively guard against the risk of credit rating downgrades and to deliver stable performance.

It suits investors who want exposure to high-quality US corporate bonds but would rather build a portfolio around issuers with verified financial health than simply follow an index.

Goldman Sachs launched the ETF in 2017, and it is managed passively (index tracking).

The fund classifies companies by industry, then evaluates profitability and debt levels to exclude those in weaker financial condition. The remaining high-quality issuers are held in proportion to their market capitalization, with limits on individual issuers to reduce reliance on any single company and build a diversified portfolio.

• Applies Goldman Sachs' proprietary fundamental screening model
• Expense ratio lower than comparable corporate bond ETFs

Assets under management (AUM) stand at $1.0B, and the expense ratio is 0.08% per year.

Compared with similar corporate bond ETFs such as LQD and VCIT, GIGB adds a security selection process based on financial metrics in an attempt to reduce potential credit risk.

Over the long term, it has delivered stable income alongside solid demand in the US corporate bond market. Price fluctuations can occur when interest rates rise, but because the portfolio is built around financially strong companies, it is expected to show relative resilience when credit spreads widen.

As preference for low-cost core assets grows, inflows have been steady, and the fund draws particular interest from smart beta investors who want to selectively hold high-quality corporate bonds during periods of lingering economic uncertainty. It is also widely used to generate regular cash flow through monthly dividends.

Risk management through selecting high-quality issuers and a low expense ratio are its main features, but investors should be aware of the risk inherent in bonds, namely exposure to interest rate volatility.

LQD and USIG, shown in the table, are flagship products that provide standard exposure to the US corporate bond market, while VCIT is an alternative specializing in intermediate-term bonds. Investors seeking somewhat higher returns can blend in high-yield bond ETFs such as USHY or HYG, and those who prioritize cost savings may also want to consider SPHY or VCSH.

Here are the key factors to check before investing in GIGB. Beyond simple corporate bond investing, it is important to clearly understand how the smart beta strategy works and the advantages of its low costs.

Even with an investment-grade rating, corporate credit risk can come to the fore during a recession, and because of its intermediate duration, price volatility may increase when interest rates rise.

It is one suitable option for investors who want to invest smartly in the US high-quality corporate bond market at low cost. Screening based on financial health can help improve long-term portfolio stability.