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)