A Massive Fixed Income ETF With 6,300 Bonds

Investors seeking an easy way to fill out a fixed-income portfolio may start off with an aggregate or total bond market ETF that provides diversified exposure to U.S. government and corporate debt securities.

Investors looking for fixed income exchange traded funds with sizable rosters have plenty of options to consider, including the cost-effective iShares Core Total USD Bond Market ETF (NASDAQ: IUSB).

The iShares Core Total USD Bond Market ETF, which is nearly four years old and has $2.14 billion in assets under management, tracks the Bloomberg Barclays U.S. Universal Index and holds over 6,300 bonds.

“This fund offers exposure to a wide range of taxable, U.S.-dollar-denominated bonds with maturities of one year or longer and any credit rating,” said Morningstar in a recent note. “It weights these securities by market capitalization, tilting the portfolio toward investment-grade bonds. The investment-grade portion takes up more than 90% of the fund, in line with its category peers. Also, low-yielding, yet secure US Treasuries and government-sponsored enterprise mortgage-backed-securities make up roughly half of the portfolio.”

IUSB Among Lease Expensive Bond Funds

IUSB has a 30-day SEC yield of 3.15% and an effective duration of 5.70 years. The ETF charges just 0.06% per year, or $6 on a $10,000 investment, making it one of the least expensive bond funds on the market today.

“Its bias toward highly rated securities could help mitigate the credit risks associated with high-yield holdings and preserve its value during market downturns,” said Morningstar.