Two of the industry’s largest fund providers are set to launch a number of bond exchange traded funds (ETFs). The mutual fund giant Vanguard Group filed for four products, while Barclay’s Global Investors began trading 8 new bond ETFs last week. Bond ETFs are a less expensive alternative to bond mutual funds and offer fixed-income investments for those who don’t want to buy bonds across a range of styles and maturities.
Vanguard will offer ETFs based on four of their existing bond mutual funds. The Total Bond Market ETF will be the most diversified, investing 40% of the corporate, Treasury, mortgage-backed, and other bonds in the index.
Barclay’s funds have 14 total bond ETFs in their iShares family. Diya Gullapalli of The Wall Street Journal states Barclay’s also filed for another bond ETF, iShares iBoxx $ High Yield Corporate Bond Fund. This will be the first high yield corporate bond, also known as junk bonds, offered as an ETF.
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