For fixed-income exposure, there are over 250 U.S.-listed bond ETFs available. Investors can take a broad approach, such as the Vanguard Total Bond Market ETF (NYSEArca: BND), which tracks the Barclays U.S. Aggregate Bond Index, or pick and choose specific bond categories based on credit quality, issuer and region, among others. For example, the Aggregate Bond Index does not include municipal bond exposure, so an investor can consider a broad munis ETF like the iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB). BND has a 1.94% 30-day SEC yield and MUB has a 1.58% 30-day SEC yield. [Aggregate Bond ETFs to Establish a Fixed-Income Portfolio’s Core]
Lastly, there are a number of alternative investments that offer attractive yields. The iShares S&P US Preferred Stock Index Fund (NYSEArca: PFF), the largest preferred stock ETF, has a 6.05% 12-month yield. The Vanguard REIT ETF (NYSEArca: VNQ), the largest real estate investment trust ETF, has a 3.75% 12-month yield. The Alerian MLP ETF (NYSEArca: AMLP), the largest master limited partnership related ETF, has a 6.65% 12-month yield. However, potential investors should be aware of the greater risks with these assets, such as preferred and REIT assets’ risks to rising interest rates. [High-Yield Preferred Stock ETFs for a Low-Rate Environment]
For more information on investing with ETFs, visit our ETF 101 category.
Max Chen contributed to this article.