June 04, 2008 at 1:00 am by Tom Lydon
The fixed-income exchange traded fund (ETF) market has grown as new ways to access bonds have become appealing to investors.
Last week, though, investors received a reminder that not every product can be a hit when Ameristock announced it was closing five ETFs linked to Treasury indexes. The company said assets just weren’t sufficient enough to continue running the funds. And unfortunately, it’s been shown that larger ETF providers tend to have most of the assets, which puts the smaller guys at a disadvantage.
John Spence for MarketWatch says that even with the recent closings, bond ETFs are still rapidly catching up to their stock-fund cousins.
The allure of low-cost, liquid methods of tapping the bond market has caused a recent flooding of the area. In fact, from April 2007 to April 2008, the number of bond ETF offerings grew from 20 to 54 – a leap of 180%.
One analyst cited the ease with which they give investors access to different maturity ranges and market segments as part of their appeal.
We can’t list every bond offering, but among the many choices for investors are:
- iShares Lehman Aggregate Bond Fund (AGG), up 1.7% year-to-date
- Vanguard Total Bond Market (BND), up 0.5% year-to-date
- SPDR Barclays Capital TIPS (IPE), up 2% year-to-date
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