Bond ETFs are the specific exchange-traded funds that invest only in fixed-income securities like bonds and treasuries. They differ from bonds in the way that they are traded over exchanges as opposed to the bonds that are sold over the counter.
Bond ETFs work as effective means for investors to gain access to the bond market, in addition to the liquidity and ease of stock trading. They provide regular coupon payments in the form of monthly dividends, while the capital income is offered as annual dividends.
Thus, bond ETFs have the features and stability of investing in bonds, coupled with the attractive prospects of transparency and ease of trading.
Ticker | Company Name | Last Price | 1-Year Return |
|---|---|---|---|
| AGG | iShares Core U.S. Aggregate Bond ETF | $97.24 | -1.88% |
| BND | Vanguard Total Bond Market ETF | $72.12 | -1.74% |
| LQD | iShares iBoxx USD Investment Grade Corporate Bond ETF | $107.94 | 0.25% |
| VCIT | Vanguard Intermediate-Term Corporate Bond ETF | $79.93 | 1.09% |
| VCSH | Vanguard Short-Term Corporate Bond ETF | $77.10 | 2.07% |
| SHV | iShares Short Treasury Bond ETF | $110.34 | -0.02% |
| BSV | Vanguard Short-Term Bond ETF | $76.47 | 0.31% |
| TIP | iShares TIPS Bond ETF | $106.37 | -2.16% |
| MBB | iShares MBS ETF | $91.88 | -2.57% |
| SHY | iShares 1-3 Year Treasury Bond ETF | $81.57 | -0.73% |
| HYG | iShares iBoxx USD High Yield Corporate Bond ETF | $77.56 | 6.00% |
| TLT | iShares 20+ Year Treasury Bond ETF | $92.92 | -12.27% |
| IEF | iShares 7-10 Year Treasury Bond ETF | $93.81 | -5.11% |
| PFF | iShares Preferred and Income Securities ETF | $32.29 | 8.14% |
| MUB | iShares National Muni Bond ETF | $107.79 | 0.90% |
| GOVT | iShares U.S. Treasury Bond ETF | $4.24 | -4.50% |
| IGSB | iShares Short-Term Corporate Bond ETF | $51.12 | 1.95% |
| BIV | Vanguard Intermediate-Term Bond ETF | $74.83 | -1.76% |
| MINT | PIMCO Enhanced Short Maturity Active ETF | $100.35 | 1.22% |
| JNK | SPDR Bloomberg Barclays High Yield Bond ETF | $94.93 | 5.87% |
| VMBS | Vanguard Mortgage-Backed Securities ETF | $45.30 | -2.37% |
| FLOT | iShares Floating Rate Bond ETF | $5.11 | 2.20% |
| BIL | SPDR Bloomberg Barclays 1-3 Month T-Bill ETF | $91.66 | -0.08% |
| SCHP | Schwab U.S. TIPS ETF | $51.66 | -2.34% |
| IGIB | iShares Intermediate-Term Corporate Bond ETF | $51.22 | 1.35% |
| IEI | iShares 3-7 Year Treasury Bond ETF | $115.22 | -1.86% |
| SCHZ | Schwab U.S. Aggregate Bond ETF | $45.67 | -2.21% |
| VTIP | Vanguard Short-Term Inflation-Protected Securities ETF | $47.73 | 0.61% |
| NEAR | iShares Short Maturity Bond ETF | $50.29 | 1.58% |
| SPSB | SPDR Portfolio Short Term Corporate Bond ETF | $29.71 | 0.81% |
| SCHO | Schwab Short-Term U.S. Treasury ETF | $48.10 | -1.43% |
| VTEB | Vanguard Tax-Exempt Bond ETF | $50.68 | 1.10% |
| PGX | Invesco Preferred ETF | $11.92 | 8.46% |
| VGSH | Vanguard Short-Term Treasury Index ETF | $57.95 | -0.99% |
| BKLN | Invesco Senior Loan ETF | $21.10 | 3.28% |
| SPAB | SPDR Portfolio Aggregate Bond ETF | $25.10 | -2.18% |
| SPIB | SPDR Portfolio Intermediate Term Corporate Bond ETF | $32.53 | 1.15% |
| FTSM | First Trust Enhanced Short Maturity ETF | $59.77 | 0.18% |
| SCHR | Schwab Intermediate-Term U.S. Treasury ETF | $48.75 | -3.12% |
| VGIT | Vanguard Intermediate-Term Treasury Index ETF | $58.19 | -2.74% |
| CWB | SPDR Bloomberg Barclays Convertible Securities ETF | $71.64 | 9.98% |
| IUSB | iShares Core Total USD Bond Market ETF | $45.25 | -1.22% |
| VCLT | Vanguard Long-Term Corporate Bond ETF | $77.10 | -1.29% |
| BLV | Vanguard Long-Term Bond ETF | $71.16 | -6.01% |
| FLRN | SPDR Bloomberg Barclays Investment Grade Floating Rate ETF | $30.77 | 1.92% |
| SHM | SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF | $47.60 | 0.72% |
| USIG | iShares Broad USD Investment Grade Corporate Bond ETF | $50.40 | 0.78% |
| LMBS | First Trust Low Duration Opportunities ETF | $48.13 | 0.12% |
| HYLB | Xtrackers USD High Yield Corporate Bond ETF | $35.66 | 6.13% |
| GBIL | Goldman Sachs Access Treasury 0-1 Year ETF | $99.95 | -0.11% |
| SJNK | SPDR Bloomberg Barclays Short Term High Yield Bond ETF | $25.23 | 4.43% |
| SHYG | iShares 0-5 Year High Yield Corporate Bond ETF | $42.47 | 4.48% |
| HYD | VanEck Vectors High-Yield Municipal Index ETF | $0.02 | -50.00% |
| TFI | SPDR Nuveen Bloomberg Barclays Municipal Bond ETF | $46.67 | 0.80% |
About Bond Investing
Bonds are often considered a lower-risk investment when compared to stocks. Investing in bonds can be a way to balance the risk of a stock portfolio. Investing in bonds is also a good way to diversify your portfolio, while still providing you with an opportunity for higher interest rates than what you will receive on a savings account or CD.
Bonds are used by companies and local governments to raise money for various projects. The borrowing company must pay back the loan at agreed-upon interest rate when the bond matures. Investing in bonds comes with risk; however, if the economy decreases and there is more competition from other investors, it may make raising capital more difficult resulting in lower-paying bonds being issued with higher interest rates for newer issues.
There are four different types of bonds you might want to invest in. The first type is a Treasury bond, which is the safest bond. These investments usually have relatively low credit risk. A Treasury bond will be backed by the United States government and have an APY (annual percentage yield) of a few percentage points per year
The second type is a Corporate Bond, which may offer higher interest rates than Treasuries but the credit risk is generally higher. This type of bond also has more market risk because its value can fluctuate with the stock market. In addition to this, there may be interest rate risk for bonds that are dependent on variable-rate interest payments; if interest rates decrease then those investors would receive less income on their investment. Investing in corporate bonds may give you a higher APY than Treasury bonds, which can be attractive. Investing in Corporate Bonds requires greater research and analysis because the credit risk is much higher.
The next type of bond to invest in is called an Agency Bond; this type of bond will offer a lower interest rate but generally has less market fluctuation than corporate bonds. Investing in agency bonds does not have as high of a risk as investing in corporate bonds because it depends on the performance of the issuer rather than its stock value. If an agency’s revenue goes up their debt obligation will increase but that should be reflected by paying more for managing their debt. Investing in these types of bonds usually provides a lower APY than what you will be able to earn on a Corporate Bond, but these bonds are generally less volatile. Investing in an Agency Bond would give you a lower rate of return than investing in Corporate Bonds.
There is another type of bond called municipal bonds; this type of bond has the lowest credit risk and interest rates when compared to corporate and Treasury bonds. The difference between Municipal Bonds and Treasuries is that they function with tax exemptions making them more attractive towards investors who pay federal income taxes because their after-tax yield will be higher than if they were holding similar taxable securities. Investing in municipal bonds can provide you with tax-free income along with high safety, which may make investing appealing. A disadvantage to investing in municipal bonds is that there is lower liquidity and higher costs when compared to Investing in corporate bonds.
You can invest in many of these bonds through exchange-traded funds (ETFs). Most bond ETFs compile a variety of similar bonds. Investing in bond ETFs could provide you with higher rates of return and lower volatility than investing in bonds through an individual company or Treasury.
Investing in one fund that offers a range of types of bonds, along with having smaller spreads will give you more diversification while still offering you a relatively high rate of return. Investing in an ETF can reduce your risk because the investment options are typically based on a benchmark index. Investing directly into the market using individual companies is subject to greater risk because its value depends on what the other companies in that industry are doing, so any fluctuation from performance may affect your total portfolio’s performance.
Investing In Bond ETFs might be one way to secure your future by providing not only safety but also reasonable returns. Investing in bonds can be a good way to earn a steady income; your investment will stay relatively constant no matter what the stock market is doing.
Investing In Bond ETFs helps you manage wealth for retirement without depending solely on the stock market, also it allows you to diversify across several exposure points which provides you with many advantages. Investing In Bond ETFs might be one of the best ways available to invest in fixed income products like Treasury Bonds, Corporate Bonds and Agency Bonds.
Factors to Consider Before Investing in Bond ETFs
Investors willing to invest in bond ETFs must remain aware of the few limitations compared to investing in bonds. The most significant feature to be considered is that bond ETFs do not mature. Therefore, it is not guaranteed that investors will receive their principal back in full, which is a sure-shot case with bonds.
Additionally, bond ETFs are equally affected by interest rates fluctuations as the bonds. When the interest rates increase, the price of bond ETFs gets negatively impacted. Also, due to the absence of fixed maturity, it becomes difficult to manage the interest rate risk with bond ETFs.
Which Bond ETFs Should I Buy?
To make the investment process simpler for you, we have organized a list of the bond ETFs. You can make a choice based on the sector, time horizon, and maturity target, among other criteria.
Investors get to choose among a wide variety of bond ETFs that can be short-term, intermediate-term, or long-term, government, municipal, or corporate, hedged, floating or fixed rate, emerging market, and high-yield.
The risk profile of each category must be considered before investing in specific bond ETFs, along with keeping in mind that bond ETFs are similar to bonds, yet vary to a large degree.
