How to invest in investment-grade bonds?

There are many ways to invest in investment-grade bonds. You can directly invest in investment-grade bonds, invest in a mutual fund focused on these bonds, or buy an investment-grade bond ETF. Buying a bond ETF focused on investment-grade bonds is the easiest way to invest in corporate bonds since you don't have to worry about selecting the right bonds or laddering your bond maturities. Investment-grade bond ETFs provide instant exposure to a large portfolio of these high-quality bonds.

How do I invest in corporate bonds?

You can buy them directly at your brokerage account, invest in a bond-focused mutual fund, or buy a bond ETF. You can buy a bond ETF in your brokerage account, making it easy to invest in corporate bonds. They also provide diversified exposure to corporate bonds, eliminating the need to select the right ones or ladder your bond maturities.

What is the largest investment-grade corporate bond ETF?

The largest investment-grade corporate bond ETF is the Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT). It had nearly $60 billion of assets under management in late 2025. The ETF focuses on corporate bonds with an average maturity of five to 10 years.

How to Buy iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)

Q: What is iShares iBoxx $ Investment Grade Corporate Bond ETF?

iShares iBoxx $ Investment Grade Corporate Bond ETF is managed by BlackRock and holds investment-grade corporate bonds. These high-quality bonds are less risky than non-investment-grade bonds (junk bonds). While they have lower yields, they tend to generate very stable interest income that the ETF distributes to holders each month. The fund can help investors diversify their portfolios, reduce risk, and earn income.

How to Invest in iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)

Key Points

LQD ETF is traded on the New York Stock Exchange and can easily be purchased through a brokerage account.
This ETF targets U.S. investment-grade corporate bonds, offering safer income.
Investing in this ETF diversifies portfolios by adding a stable, fixed-income element with low risk.

iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD -0.64%) is one of the hundreds of exchange-traded funds (ETFs) focused on the global bond market. Like most bond ETFs, this fund focuses on a specific segment of the bond market: U.S. investment-grade rated corporate bonds. These high-quality bonds provide investors with a low-risk fixed-income stream.

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NYSEMKT: LQD

iShares Trust - iShares iBoxx $ Investment Grade Corporate Bond ETF

Today's Change

(-0.64%) $-0.69

Current Price

$107.86

Key Data Points

Day's Range

$107.69 - $107.95

52wk Range

$105.39 - $112.93

Volume

10K

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This guide will teach you everything you need to know about the iShares iBoxx $ Investment Grade Corporate Bond ETF. It will also show you how to invest in ETFs for beginners.

What is iShares iBoxx $ Investment Grade Corporate Bond ETF?

iShares iBoxx $ Investment Grade Corporate Bond ETF is exactly as its name suggests: an ETF focused on investment-grade corporate bonds. Investment-grade bonds have a lower default risk than non-investment-grade bonds (i.e., junk bonds) and carry slightly higher credit risk than treasuries and municipal bonds.

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Exchange-Traded Fund (ETF)

An exchange-traded fund, or ETF, allows investors to buy many stocks or bonds at once.

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This BlackRock (BLK -2.00%)-managed ETF provides investors with broad exposure to a range of high-quality U.S. corporate bonds. It aims to track the investment results of an index composed of investment-grade corporate bonds denominated in U.S. dollars (Markit iBoxx USD Liquid Investment Grade Index).

The ETF makes it easy to invest in a large portfolio of investment-grade bonds through a single fund. Adding corporate bonds to a portfolio increases diversification, lowers risks, and provides a stable source of income.

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How to buy iShares iBoxx $ Investment Grade Corporate Bond ETF

Open your brokerage account: Log in to your brokerage account where you handle your investments. If you don't have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
Search for the ETF: Enter the ticker "LQD" into the search bar to bring up the ETF's trading page.
Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
Submit your order: Confirm the details and submit your buy order.
Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

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Does iShares iBoxx $ Investment Grade Corporate Bond ETF pay a dividend?

iShares iBoxx $ Investment Grade Corporate Bond ETF pays a dividend. It makes monthly distributions of the interest income generated by the bonds it holds. Those payments fluctuate based on the interest rates of the bonds in its portfolio.

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As of late 2025, the fund delivered a 4.32% income yield over the trailing-12-month period. The average yield to maturity of its bonds was 4.87%, so the fund could make higher income distributions in the future. That could make it a solid dividend ETF for those seeking income.

What is iShares iBoxx $ Investment Grade Corporate Bond ETF's expense ratio?

The ETF charges investors a 0.14% expense ratio. That's a relatively low ETF expense ratio overall and in line with many other top bond ETFs. However, it's higher than many of the lowest-cost bond funds.

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ETF Expense Ratio

Annual fee as a percentage of assets that an Exchange-Traded Fund charges investors for management and operational costs.

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For example, the largest bond funds by AUM, IShares Core U.S. Aggregate Bond ETF (AGG -0.63%) and Vanguard Total Bond Market ETF (BND -0.57%), each have a 0.03% expense ratio. That means a $10,000 investment in those top bond funds would cost about $3 annually, while that same investment in iShares iBoxx $ Investment Grade Corporate Bond ETF would cost about $14 per year.

The higher cost means investors would receive less of the income this bond fund generates each year, which might make it a less appealing long-term ETF compared to lower-cost funds.

Historical performance of iShares iBoxx $ Investment Grade Corporate Bond ETF

Interest rates can have a significant impact on bonds. Lower rates affect bond yields while rising rates can weigh on their prices. These two headwinds have caused investment-grade corporate bonds to deliver relatively meager returns over the past decade.

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Data source: BlackRock.
Fund	1-Year	3-Year	5-Year	10-Year
iShares iBoxx $ Investment Grade Corporate Bond ETF	3.36%	4.41%	(0.63%)	3.00%
Benchmark (Markit iBoxx USD Liquid Investment Grade Index)	3.41%	4.54%	(0.52%)	3.15%

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While investment-grade corporate bonds have been a rather unappealing investment over the years, this ETF has only slightly underperformed its benchmark due to its expense ratio.

On a more positive note, higher interest rates in recent years are starting to have a positive impact on bond returns. If interest rates remain relatively high, bonds could deliver higher returns in the future.

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The bottom line

iShares IBoxx $ Investment Grade Corporate Bond ETF enables investors to gain fairly broad exposure to high-quality bonds. The fund allows investors to diversify their portfolios by adding a fixed-income element, which helps reduce risk. Investment-grade bonds also supply relatively stable income.

However, the tradeoff for this lower-risk profile involves lower returns, especially during periods of low interest rates. Despite that, investment-grade bonds are an excellent addition to any investor's portfolio, especially as they approach retirement. This ETF makes it easy to invest in high-quality bonds.

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FAQ

Investing in iShares iBoxx $ Investment Grade Corporate Bond ETF FAQ

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About the Author

Matt DiLallo has been a contributing Motley Fool stock analyst specializing in the energy, industrials, and real estate sectors since 2012. He also covers dividend-paying stocks, pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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@MatthewDiLallo

Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Matt DiLallo has positions in JPMorgan Chase, Vanguard Total Bond Market ETF, Verizon Communications, and iShares Trust - iShares Core U.s. Aggregate Bond ETF. The Motley Fool has positions in and recommends Goldman Sachs Group, JPMorgan Chase, Oracle, and Vanguard Total Bond Market ETF. The Motley Fool recommends BlackRock and Verizon Communications. The Motley Fool has a disclosure policy.

How to Invest in iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)

Key Points