There are times when an investor wants aggregate U.S. bond exposure and other times when targeted duration (short or long) is necessary given the current market environs—whatever the need, Vanguard offers suitable ETFs.
In this case, it’s getting U.S. bond exposure that strikes a chord with investors transparency, liquidity, diversification, and cost concerns. That’s where four ETFs from Vanguard can offer investors this ideal exposure:
- Vanguard Total Bond Market Index Fund ETF Shares (BND): BND seeks the performance of Bloomberg Barclays U.S. Aggregate Float Adjusted Index. The Bloomberg Barclays U.S. Aggregate Float Adjusted Index represents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States, including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.
- Vanguard Short-Term Bond Index Fund ETF Shares (BSV): BSV seeks to track the performance of the Bloomberg Barclays U.S. 1-5 Year Government/Credit Float Adjusted Index. This index includes all medium and larger issues of U.S. government, investment-grade corporate, and investment-grade international dollar-denominated bonds that have maturities between 1 and 5 years and are publicly issued.
- Vanguard Long-Term Bond Index Fund ETF Shares (BLV): BLV seeks to track the performance of the Bloomberg Barclays U.S. Long Government/Credit Float Adjusted Index. Bloomberg Barclays U.S. Long Government/Credit Float Adjusted Index includes all medium and larger issues of U.S. government, investment-grade corporate, and investment-grade international dollar-denominated bonds that have maturities of greater than 10 years and are publicly issued.
- Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV): BIV seeks to track the performance of the Bloomberg Barclays U.S. 5-10 Year Government/Credit Float Adjusted Index. This index includes all medium and larger issues of U.S. government, investment-grade corporate, and investment-grade international dollar-denominated bonds that have maturities between 5 and 10 years and are publicly issued.
Total Market or Drilling Down Duration
When it comes to a multi-purpose bond ETF, BND is akin to a Swiss army knife—it can do it all for any portfolio with respect to U.S. bond exposure. As a hedging component in a traditional stock/bond portfolio split, to use in tandem with other bond ETFs for diversification, or whatever the case may be, BND can serve a variety of needs.
“BND gives you an easy way to get exposure to 100% of the U.S bond market through a single, diversified investment as it holds more than 8,000 domestic, investment-grade bonds,” Vanguard noted on its website, highlighting a total market bond video that explains how each ETF can fit into a portfolio.
When fixed income investors to fine-tune their exposure to reduce interest rate risk, BSV can help. On the opposite end of the duration spectrum, investors willing to go longer in duration to get more yield can turn to BLV.
Looking for a middle ground? Intermediate bonds can give fixed income investors a happy median for long and short duration. BIV might be appropriate in this case.
“For greater precision, you can use our broad investment-grade ETFs—available for short-, intermediate-, and long-term—to fine-tune a portfolio’s interest rate and credit risk even as you target duration for your clients’ needs,” Vanguard noted.
For more news, information, and strategy, visit the Fixed Income Channel.