Equity exchange traded funds are off to a nice start this year but the outperformance of bond ETFs in 2011 is a reminder they can stabilize a portfolio in rough markets.
Income-seeking investors are being drawn to various bond ETFs and demand remains solid.
Aggregate or total bonds refer to a range of securities, such as convertible, floating-rate, foreign, high-yield tax-exempt munis and inflation-protected bonds.
With the Fed committed to keep rates low, many investors are scratching for yield.
Last year was an exceptional year for bonds. For instance, the Barclays Aggregate Bond Index, a widely used proxy for the broad, investment-grade U.S. bond market, gained 8%, whereas the S&P 500 increased 2% in 2011, according to Morningstar data. [Schwab Says Investors Favoring Corporate Bonds, Dividend ETFs]
“We have a solid forward calendar of global borrowers interesting in accessing the U.S. dollar market,” a syndicate manager in New York said. “Despite the improvement in the euro and sterling markets, the U.S. market is really the most reliable in terms of execution and liquidity.”
The syndicate manager also noted that issuance should increase into March to fund strategic transactions, such as stock repurchases and pension liabilities. [Low Fees, Yields Drive Interest in Bond ETFs]
“We’re also starting to see signs of growth in the U.S. and global economy, and all that’s a pretty solid harbinger of more supply,” the manager added. “This business is notoriously difficult to forecast, but I’m bullish that issuance will continue at the pace seen last year.”
Bond ETFs include:
- AdvisorShares Madrona Forward Global Bond ETF (NYSEArca: FWDB)
- Guggenheim Enhanced Core Bond (NYSEArca: GIY)
- Guggenheim Enhanced Ultra-Short Bond ETF (NYSEArca: GSY)
- Grail McDonnell Core Taxable Bond Fund (NYSEArca: GMTB)
- iShares Barclays US Aggregate Bond Fund (NYSEArca: AGG)
- iShares Barclays Intermediate Government/Credit Bond Fund (NYSEArca: GVI)
- iShares Barclays Government/Credit Bond Fund (NYSEArca: GBF)
- iShares 10 Year Government/Credit Bond Fund (NYSEArca: GLJ)
- Schwab U.S. Aggregate Bond ETF (NYSEArca: SCHZ)
- SPDR Barclays Capital Investment Grade Floating Rate (NYSEArca: FLRN)
- SPDR Lehman Aggregate Bond ETF (NYSEArca: LAG)
- Vanguard Total Bond Market ETF (NYSEArca: BND)
- Vanguard Short-Term Bond ETF (NYSEArca: BSV)
- Vanguard Intermediate-Term Bond Index Fund (NYSEArca: BIV)
- Vanguard Long-Term Bond ETF (NYSEArca: BLV)
For more information on bonds, visit our bond ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.