Moreover, low inflationary pressures have made fixed-income assets’ real yield, or yield after accounting for inflation, more attractive.

Looking ahead, the eventual Federal Reserve interest rate normalization will be a major headwind for bond funds. Since bond funds are comprised of various debt assets with varying levels of maturities, older debt securities will be discounted in a rising rate environment as newer issues come with more attractive yields.

Related: Global Zero Interest Rate Policies Will Support U.S. Treasury ETFs

Investors seeking a core fixed-income portfolio position may take a look at a number of broad aggregate bond or total bond market ETFs.

Diversified bond ETFs:

  • iShares Core U.S. Aggregate Bond ETF (NYSEArca: AGG)
  • Vanguard Total Bond Market ETF (NYSEarca: BND)
  • Vanguard Short-Term Bond ETF (NYSEArca: BSV)
  • Vanguard Intermediate-term Bond ETF (NYSEArca: BIV)
  • Vanguard Total International Bond ETF (NYSEArca: BNDX)
  • Schwab U.S. Aggregate Bond ETF (NYSEArca: SCHZ)
  • PIMCO Total Return Exchange-Traded Fund (NYSEarca: BOND)
  • SPDR DoubleLine Total Return Tactical ETF (NYSEArca: TOTL)
  • iShares Intermediate Government/Credit Bond Fund (NYSEArca: GVI)
  • SPDR Barclays Aggregate Bond ETF (NYSEArca: BNDS)
  • PowerShares CEF Income Composite Portfolio (NYSEArca: PCEF)
  • iShares Core 1-5 Year USD Bond ETF (NYSEArca: ISTB)
  • SPDR Barclays Investment Grade Floating Rate (NYSEArca: FLRN)
  • iShares Core Total USD Bond Market ETF (NYSEArca: IUSB)
  • Vident Core U.S. Bond Strategy ETF (NasdaqGS: VBND)
  • RiverFront Strategic Income Fund (NYSEArca: RIGS)
  • iShares Government/Credit Bond ETF (NYSEArca: GBF)
  • Newfleet Multi-Sector Unconstrained Bond ETF (NYSEArca: NFLT)
  • iShares Core Long-Term US Bond ETF (NYSEArca: ILTB)
  • Fidelity Total Bond ETF (NYSEArca: FBND)
  • First Trust Enhanced Short Maturity Fund (NasdaqGM: FTSM)
  • AdvisorShares Sage Core Reserves ETF (NYSEArca: HOLD)
  • WisdomTree Barclays U.S. Aggregate Bond Enhanced Yield Fund (NYSEArca: AGGY)
  • iShares Edge U.S. Fixed Income Balanced Risk ETF (BATS: INC)
  • WisdomTree Barclays U.S. Aggregate Bond Zero Duration Fund (NYSEArca: AGZD)
  • AdvisorShares Madrona Forward Global Bond ETF (NYSEArca: FWDB)
  • Guggenheim Total Return Bond ETF (NYSEArca: GTO)
  • iShares Yield Optimized Bond ETF (NYSEArca: BYLD)
  • WisdomTree Barclays U.S. Aggregate Bond Negative Duration Fund (NYSEArca: AGND)
  • Grail McDonnell Core Taxable Bond Fund (NYSEArca: GMTB)
  • WisdomTree Western Asset Unconstrained Bond Fund (NasdaqGM: UBND)

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