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Beware of bond bubble forming in ETFs

Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

Should you invest in fixed income when corporations are all too eagerly selling new bonds in staggeringly large amounts? Likely not.

This year, U.S. companies like Microsoft, AT&T, Amgen and Oracle each sold billions of dollars worth of debt to take advantage of low interest rates.

One of the few economies with even lower interest rates than the U.S. is Europe so Blackstone, 3M and United Technologies all sold billions in euro-dominated debt recently.

But these corporations don't need the cash and don't even have a specific use in mind. They are just taking advantage of what they see as extremely high prices for bonds.

Why should investors accommodate them by adding those bonds or corporate bond exchange-traded funds to their portfolio? They shouldn't.