Editor’s note: This article was first published in February 2011; its market commentary on the shortage of bank credit, the growth of euro-zone corporate debt and emerging-market corporate debt delivering expected returns reflects that time. Fund providers are named as in 2011: CAAM Funds and Lyxor later became part of Amundi, and db x-trackers now trades as Xtrackers.
With bank credit drying up, companies are turning to issuing corporate debt. While one of the most profitable investments right now is investing in emerging-market corporate debt, it does carry more risk, although I have to say that, for now, it is performing perfectly and delivering the expected returns.
For investors who don’t want to take on that extra risk, there is euro-zone corporate debt, which has grown because of the lack of bank loans and is considered lower risk. Since this market is hard for a private investor to access directly, you can get in through one of the star investment vehicles of recent years, ETFs, and in this case the corporate bond ETF (debt issued by companies).
To find out what an ETF is and how it works, see our article What is an ETF? Basically, though, it’s like investing in the stock market, so you need to do the same homework when choosing the right “basket of securities”.
The largest providers of this product in the European market are Lyxor, db x-trackers and CAAM Funds.
Further reading
- Investing in warrants: a definition
- The 7 types of investors, according to Robert Kiyosaki
- How to invest in the US stock market
Featured image: aj82, CC BY-SA 2.0, via Wikimedia Commons.
