Is F/m 3-Year Investment Grade Corporate Bond ETF (ZTRE) a Strong ETF Right Now?

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19 hours ago

The F/m 3-Year Investment Grade Corporate Bond ETF (ZTRE) was launched on 01/10/2024, and is a smart beta exchange traded fund designed to offer broad exposure to the Investment Grade Corporate Bond ETFs category of the market.
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Because the fund has amassed over $200.65 million, this makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. ZTRE is managed by F/M Investments. Before fees and expenses, ZTRE seeks to match the performance of the ICE 3-YEAR US TARGET MATURITY CORP INDEX.
The ICE 3-Year US Target Maturity Corporate Index comprises of selected investment-grade corporate bonds of both U.S. and non-U.S. issuers that are included in the ICE BofA US Corporate Index; have at least 2.5 years but less than 3.5 years remaining to maturity and have at least $300 million face value amount outstanding.
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.15% for this ETF, which makes it on par with most peer products in the space.
ZTRE's 12-month trailing dividend yield is 4.67%.
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Cash & Other (Cash&Other) accounts for about 1.10% of total assets, followed by Ch Robinson Worldwide Inc 4.2% 04/15/2028 (12541WAA8) and Ul Solutions Inc 6.5% 10/20/2028 (903731AA5).
Its top 10 holdings account for approximately 3.19% of ZTRE's total assets under management.
Year-to-date, the F/m 3-Year Investment Grade Corporate Bond ETF return is roughly 2.81% so far, and is up about 6.29% over the last 12 months (as of 06/06/2025). ZTRE has traded between $49.68 and $51.33 in this past 52-week period.
The ETF has a beta of 0.05 and standard deviation of 2.44% for the trailing three-year period. With about 430 holdings, it effectively diversifies company-specific risk.
F/m 3-Year Investment Grade Corporate Bond ETF is a reasonable option for investors seeking to outperform the Investment Grade Corporate Bond ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) tracks ICE BOFA 1-5 YEAR US CORPORATE INDEX and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) tracks Markit iBoxx USD Liquid Investment Grade Index. IShares 1-5 Year Investment Grade Corporate Bond ETF has $21.07 billion in assets, iShares iBoxx $ Investment Grade Corporate Bond ETF has $30.19 billion. IGSB has an expense ratio of 0.04% and LQD charges 0.14%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Investment Grade Corporate Bond ETFs.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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F/m 3-Year Investment Grade Corporate Bond ETF (ZTRE): ETF Research Reports
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD): ETF Research Reports
iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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