It tracks the Bloomberg U.S. Corporate Bond Index and holds investment-grade, US dollar-denominated corporate bonds on a market-capitalization-weighted basis. It does not include high-yield bonds, so its credit risk is relatively low.

It suits medium- to long-term bond investors who want diversified exposure across the corporate bond market while limiting credit risk to investment-grade issuers.

Launched by State Street (SSGA) in 2011, it is a passively managed (index-tracking) ETF.

The fund replicates the entire US investment-grade corporate bond market on a market-capitalization-weighted basis. It holds hundreds of corporate bonds across a variety of sectors, including financials, industrials and utilities, and its maturities are evenly spread from short to long term, so it has little concentration in any particular duration.

• Broad exposure to investment-grade corporate bonds across the entire market
• Low expense burden within its category

Assets under management (AUM) stand at $2.1B, and the expense ratio is 0.03% per year.

Its expense burden is lower than that of LQD and USIG, which are in the same investment-grade corporate bond category, and its index-based passive management removes security selection risk.

Returns on investment-grade corporate bond ETFs vary widely depending on the direction of interest rates. When rates fall, bond prices rise and returns tend to improve. When rates rise, duration risk comes to the fore and prices tend to come under pressure.

Inflows into the investment-grade corporate bond market tend to increase when safe-haven demand rises, and even during periods of heightened market volatility, credit spreads generally widen less than they do for high-yield bonds. The monthly dividend structure also draws some demand from investors who prefer steady cash flow.

Its strengths are a low expense ratio and broad diversification across investment-grade corporate bonds, while the main risks are duration risk from interest rate changes and credit spread fluctuations.

Comparable products in the same investment-grade corporate bond category shown in the table include LQD, USIG and HYG. LQD is iShares' flagship investment-grade corporate bond ETF, with large AUM and abundant liquidity, while USIG focuses on short- to medium-term investment-grade corporate bonds and has somewhat lower duration. HYG, SPHY and USHY include high-yield bonds to pursue higher income, but their credit risk is correspondingly higher. As a direct substitute, VCIT, which tracks the same investment-grade corporate bond market, can be considered, and SPSB is another option for those who want to focus on short-term corporate bonds.

Here are the points to review before investing in SPBO. Although it is an investment-grade corporate bond ETF, it is wise to understand the interest rate environment, duration, credit risk and currency impact in advance.

When interest rates rise, prices may fall because of duration risk, and when the economy slows, wider credit spreads may cause additional losses. Investors holding Korean won should also factor in exchange rate movements.

It is a core investment-grade corporate bond ETF that tracks the Bloomberg U.S. Corporate Bond Index at a low expense ratio. It is a suitable choice for medium- to long-term bond investors who want to diversify across the corporate bond market while limiting credit risk to investment-grade issuers.