Even with safe haven government debt yields like the benchmark 10-year Treasury note pushing higher, fixed income investors are demanding more from their portfolios, which Vanguard can provide with three of their exchange-traded funds (ETFs).
Investors aren’t painted into a corner of accepting only the riskiest debt in the bond markets. They can stick to the safe confines of Treasury notes, but must accept higher duration for more yield. This is possible with ETFs like the Vanguard Extended Duration Treasury Index Fund ETF Shares (EDV).
EDV seeks to track the performance of an index of extended-duration zero-coupon U.S. Treasury securities. The fund employs an indexing investment approach designed to track the performance of the Bloomberg U.S. Treasury STRIPS 20–30 Year Equal Par Bond Index.
This index includes zero-coupon U.S. Treasury securities (Treasury STRIPS), which are backed by the full faith and credit of the U.S. government, with maturities ranging from 20 to 30 years. The fund invests by sampling the index. At least 80% of its assets will be invested in U.S. Treasury securities held in the index.
Longer Duration and Emerging Markets Options
Another ETF to consider that goes beyond Treasury notes is the Vanguard Long-Term Bond Index Fund ETF Shares (BLV). BLV seeks to track the performance of the Bloomberg U.S. Long 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 of greater than 10 years and are publicly issued.
As such, BLV can draw from a variety of options when it comes to bond investments. As mentioned, the common denominator is that the fund sticks to higher duration with debt holdings that exceed a decade.
Lastly, yield can be had via emerging markets (EM) bonds with the Vanguard Emerging Markets Government Bond Index Fund ETF Shares (VWOB). VWOB seeks to track the performance of a benchmark index that measures the investment return of U.S. dollar-denominated bonds issued by governments and government-related issuers in emerging market countries.
The fund employs an indexing investment approach designed to track the performance of the Bloomberg USD Emerging Markets Government RIC Capped Index. The fund comes with a low 0.28% expense ratio.
For more news, information, and strategy, visit the Fixed Income Channel.