After an atrocious 2022, fixed income is clearly alive and well. Just look at the Vanguard Total Bond Market ETF (BND). The fund has reached $100 billion in assets, making it the first fixed income ETF to cross this threshold.
BND has brought in more than $16 billion in investor capital thus far this year. This is after Vanguard crossed the $2 trillion mark in U.S.-listed ETF assets under management earlier this year. So, VettaFi’s Vice Chairman Tom Lydon wasn’t kidding when he called Vanguard “the Hoover of the ETF industry.” (Plus, it probably doesn’t hurt that BND only charges 3 basis points.)
BND provides broad exposure to taxable investment-grade U.S. dollar-denominated bonds (excluding inflation-protected and tax-exempt bonds). According to Vanguard, the fund offers “relatively high potential for investment income” and is “appropriate for diversifying the risks of stocks in a portfolio.”
The fund seeks to track the performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Index. The index includes government, corporate, and international dollar-denominated bonds, plus mortgage- and asset-backed securities. The securities represented in BND’s index all have maturities of more than one year.
Low-Cost, Well-Diversified Core Fixed Income Exposure
VettaFi’s Head of Research Todd Rosenbluth wasn’t surprised that the Vanguard ETF reached this milestone.
“Advisors have increasingly turned to ETFs for asset allocation purposes in 2023,” he said. “BND offers low-cost, well-diversified core fixed income exposure that can easily be pared with U.S. equity ETFs.
“The bond ETF provides income and downside protection for an equity-heavy portfolio. We are finding many advisors using BND and BNDX for global purposes,” he added.
The Vanguard Total International Bond ETF (BNDX) offers broad fixed income exposure across major bond markets outside of the U.S.
The Top-Performing ETFs Out There
Vanguard’s CEO Tim Buckley said at Exchange 2023 that the firm’s goal is “to make sure we’re producing the top-performing funds and ETFs out there.”
“We’ll wrap it with low-cost, scalable advice and deliver them on a world-class, digitally enabled platform,” he noted. “And if you do that well and you can keep improving it, you’ll create value into the future.”
For more news, information, and analysis, visit the Fixed Income Channel.