With its leaning toward government-backed issues, BND's yield of 4.4% is just slightly greater than the 3.6% being paid by the iShares Lehman 7-10 Year Treasury Index (NYSE: IEF). Meanwhile, LQD is yielding close to 5.7%.

"Investment-grade corporates aren't highly correlated to junk or Treasuries," Romey said. "So they're a wonderful diversification tool."

The most popular pure-corporate bond ETF is LQD with some $3.6 billion in assets. But much of that is no doubt due to its early mover status. Its mid-2002 launch made it one of the first fixed-income ETFs on the market. But there's another option with similar characteristics.

The iShares Lehman Credit Bond Index (NYSE: CFT) has about the same duration as LQD at just north of six years. And its yield of 5.4% is within the same range as LQD's payout.

The two track very different benchmarks, however. In the case of LQD, it follows an index that includes the 100 most liquid issues. That's a lot fewer than the 3,300-plus bonds tracked by CFT's Lehman index.

"The two products offer exposure to two different segments of the investment-grade corporates market," said Matthew Tucker, head of investment strategy for fixed-income at Barclays Global Investors. "CFT captures the full market while LQD captures the more liquid segments of the market."

Long-term correlations between the two show not a lot of price performance difference. Tucker says that even though it's a much more concentrated fund, LQD's benchmark doesn't stray far from the broader market's sector weightings.

Quicker Response

"The bonds in LQD are generally larger and more heavily traded, so they tend to respond more quickly to market events," he added.

In down cycles, it's not uncommon to expect LQD to fall more. Likewise, when markets are strongly moving up, LQD tends to outperform. "Part of the situation is that less-liquid bonds don't always trade every day. That can result in a lag effect in tracking short-term bond performances," Tucker said. "But over time, both indexes tend to move very similarly."

BGI also breaks the broad Lehman credit benchmark into different subsets. One of those is the iShares Lehman Intermediate Credit Bond Index (NYSE: CIU). The ETF focuses on just short- and intermediate-term bonds. It's currently yielding around 5% with an average duration of 4.3 years.

"It tends to have a lower yield than CFT," Tucker said. "But it has less sensitivity to market changes and interest rates."

CIU launched last January along with CFT and another purely investment-grade corporate ETF, the iShares Lehman 1-3 Year Credit Bond Index (NYSE: CSJ). The shortest-term portfolio of its kind, CSJ has a duration of 1.9 years and now yields around 4.3%.

"These are the only pure investment-grade corporate bond funds we've seen so far on the market," said Romey, the portfolio manager. "They really give us some interesting options to broaden individual bond allocations depending on different appetites for risk."

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