Investors seeking an easy way to fill out a fixed-income portfolio may start off with an aggregate or total bond market exchange traded fund that provides diversified exposure to U.S. government and corporate debt securities.
For instance, the Barclays U.S. Aggregate Bond Index has been the go-to benchmark for many fixed-income investors. The benchmark tracks U.S. investment-grade corporate bonds, mortgage-backed securities and U.S. Treasuries. However, potential investors should note that the index excludes municipal bonds, Treasury inflation-protected securities and high-yield debt.
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A fixed-income portfolio’s core positions will typically include many low-risk investments that help support wealth over the long run. U.S. Treasuries has filled this role, accounting for about 70% of the Barclays benchmark.
These debt securities have served investors well in recent years as a hedge against market volatility and stable source of income. Bonds have also been outperforming this year as a market sell-off and lingering uncertainty pushed investors toward safer debt securities.