This is an interest rate hedged bond ETF that holds investment-grade corporate bonds while shorting Treasury futures to offset interest rate risk. It aims to capture the credit spread income of corporate bonds while reducing the price risk caused by interest rate changes.

It suits investors who want to reduce exposure to rising rates and pursue credit spread income from corporate bonds, while being willing to accept credit risk.

It is a passive (index-tracking) ETF managed by ProShares.

While holding investment-grade corporate bonds, the fund shorts Treasury futures to bring the portfolio's duration close to zero. It reduces price risk from interest rate changes and focuses on the credit spread income of corporate bonds, but it remains exposed to losses if the credit environment deteriorates.

• Combines corporate bonds with a short Treasury interest rate hedge
• Focuses on credit spread income

Assets under management (AUM) stand at $404.7M, and the expense ratio is 0.30% per year.

The main point of comparison is its structure, which reduces interest rate risk through short Treasury positions, versus standard corporate bond ETFs that bear that risk in full.

Interest rate hedged corporate bonds are driven more by credit spreads than by interest rates. They tend to be strong when the credit environment improves and weak when credit spreads widen. Because the hedge reduces the impact of rate changes, they follow a different path from conventional corporate bonds.

Fund flows into hedged bonds vary with the interest rate environment, credit outlook, and demand for income. When concerns about rising rates grow, money sometimes moves into products that reduce rate risk. It is also worth noting that performance varies with the credit environment.

Its strength is reduced interest rate risk, while credit risk, hedging costs, and the opportunity cost when rates fall are the main considerations.

For exposure to broad bonds that bear interest rate risk in full, direct substitutes include IUSB, and for flexible active income, products such as BINC are also worth comparing. Those who want multisector active bonds can also consider products such as PYLD. The three products in the table, IUSB, BINC, and PYLD, are all managed while bearing interest rate risk and therefore have no rate hedge. This ETF is distinguished by combining corporate bonds with a short Treasury interest rate hedge.

Here are the points to review before investing in IGHG. Reduced interest rate risk is appealing, but credit risk, hedging costs, and the opportunity cost when rates fall should be checked in advance. It is also a good idea to compare it with conventional corporate bond products that bear interest rate risk.

Corporate bond price declines caused by wider credit spreads are the main driver of short-term performance, and when rates fall, the hedge may cause returns to trail those of conventional corporate bonds. If hedging costs accumulate, they can weigh on long-term performance.

It is a suitable candidate for investors who want corporate bond income while reducing exposure to rising rates. For those willing to bear interest rate risk in full, a product such as IUSB is an option, while those who want rate-hedged corporate bonds should compare it with this product before choosing.