As Yields Fall to Fresh Lows, Consider the BND ETF

Treasury yields have been falling to new lows as of late, but ETF investors can still capture the moves with the Vanguard Total Bond Market Index Fund ETF Shares (BND).

Another rise in Covid-19 cases has been spooking investors, leading to heavy sell-offs in stocks.

“U.S. Treasury yields continued to slide on Monday, with the 10-year benchmark rate falling to its lowest level in five months,” CNBC reported. “The yield on the benchmark 10-year Treasury note fell 11 basis points to 1.189% at around 4:00 p.m. ET. The yield on the 30-year Treasury bond slid 11 basis points to 1.82%. Yields move inversely to prices.”

Market analysts have been ruminating over whether or not the new Covid cases could significantly slow the economic recovery. As such, investors could be scrambling back into bonds.

“The entire financial market is acting as though a significant economic slowdown is nearing,” said Jim Paulsen, chief investment strategist at the Leuthold Group.

“Covid redux is adding to fears as renewed mask mandates are scaring many that economic closures may also start to happen again. This fear is causing some to lower real GDP estimates again which is driving bond yields lower and hitting economically sensitive stocks like cyclical sectors and small cap stocks the most,” Paulsen added.

A Flexible, Total-Bond ETF

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.

Bond investors can use BND as a traditional hedging component when the equities market goes awry, such as during Monday’s trading session. Short-term traders can also use the ETF given its dynamic ability to be bought and sold quickly in the open market.

With its exposure to debt markets outside of the U.S., BND also gives bond investors the necessary diversification in their fixed income portfolios. This can help with capturing yield or reducing concentration risk in one specific debt market.

BND 1 Year Performance

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