Bond ETFs trade during the day like individual securities. The bonds in the portfolio pay interest to investors similar to a stock dividend. [ETF Moves to Help Recession Proof Your Portfolio]
Here are some of the major categories of bonds and ETFs that track them:
- Safety: Treasury bonds and investment-grade corporate bonds are considered among the safest. These bonds tend to do well in a down economy because of their steady, safe nature. But the low risk does come with a lower yield. The iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) yields 3.4%, and has about $3.25 billion in assets. The iShares iBoxx $ Investment Grade Corporate Bond (NYSEArca: LQD) boasts $14.75 billion in assets and has a yield of 4.6%.
- Higher Yields: For those investors who prefer a more aggressive approach, and can stomach a bit more risk, emerging market bond ETFs could be a match. WisdomTree Emerging Markets Local Debt (NYSEArca: ELD) yields 4.54% and has about $1.42 billion in assets. [These ETFs earn A+ Ratings From The Street]
- Even Higher Yields: The bravest investors can look to junk bonds. SPDR Barclays Capital High Yield Bond ETF (NYSEArca: JNK) has about $7.4 billion in assets, and the fund yields over 8%.
SPDR Barclays Capital High Yield Bond
Tisha Guerrero contributed to this article.