Exchange traded funds (ETFs) have different ways of generating returns for investors, and one way is through bond funds. They buy a relatively static pool of securities based on an index, and they’re attractive for the same reason other ETFs are: lower cost, because they lack an active manager.
Jack Colombo for Forbes shares his preferences in the world of ETF bond funds. Check out these bond ETFs:
- iShares iBoxx Investment Grade Corporate Bond Fund (LQD): Yields 5.64% with an expense ratio of 0.15%.
- iShares Lehman 7-10Yr Treasury Bond Fund (IEF): Yields 3.80% with an expense ratio of 0.15%; focuses on government bonds.
- Enhanced S&P 500 Covered Call Fund (BEO): This new idea for a bond fund generates income by buying an index of stocks and then writing call options on them.
- WisdomTree Total Dividend Fund (DTD): Pays 3.37% with an expense ratio of 0.28%; buys a portfolio of dividends paying common stocks and pay out the proceeds to shareholders.
In addition to Colombo’s picks, a few other bond funds we track are currently residing above their trend lines (200-day moving average):
- Vanguard Total Bond Market (BND)
- iShares Lehman 20+ Year Treasury Bond (TLT)
- iShares Lehman 3-7 Year Treasury Bond (IEI)
- iShares Lehman TIPS Bond (TIP)
- iShares Lehman 1-3 Year Treasury Bond (SHY)
- Vanguard Short-Term Bond (BSV)
- iShares Lehman Aggregate Bond (AGG)
- SPDR Lehman International Treasury Bond (BWX)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.