Two popular investment-grade corporate bonds include the Vanguard Intermediate-Term Investment-Grade Investor and the Fidelity Total Bond, according to Carolyn Bigda and Kathy Kristof for Kiplinger. The Vanguard fund, known as VFICX, holds roughly three-fourths of its assets in corporate bonds, while the Fidelity Total Bond, known as FTBFX, holds investment-grade corporate bonds along with U.S. Treasuries.
Vanguard’s corporate bond fund holds 75 percent of its assets in single-A corporate bonds or higher, explains Bigda and Kristof. Many corporate bond funds hold at or less than 45 percent of their assets in single-A corporate bonds, and Vanguard only charges 0.20 percent in expenses to investors in assets annually. As of 2015, the VFICX corporate bond fund yields 2.4 percent annually.
The Fidelity Total Bond yields 2.4 percent annually, notes Bigda and Kristof. However, the fund invests aggressively in junk corporate bonds and debt in emerging markets. Corporate bonds allow investors to purchase the debt of companies for a predetermined interest rate, price and time. Investors become the lenders when they purchase bonds, and the companies and corporations who issue corporate bonds become the borrowers, states Investopedia. The yield on corporate bonds runs slightly higher than traditional investments because of the potential default risk in the event the company or corporation can no longer pay the interest on the bonds.