Best Bond ETFs Right Now

Invest in the best bond ETFs today with Interactive Brokers as your trusted online brokerage.

To a vast majority, investing mainly involves the stock market. The bond market, however, is larger. The U.S. stock market is valued at slightly above $46 trillion while the bond market’s value is about $52 trillion. And as the stock market falls, tense investors look to exchange-traded funds (ETFs) and mutual funds for sanity and protection. ETFs aren’t reserved entirely for equities — bond ETFs invest exclusively in fixed-income securities.

Bonds essentially are loans — to municipalities, corporations or government agencies — and investors are repaid their principal with interest over time. Although they aren’t as exciting or flashy as stocks, bond ETFs may guide a retiree or anyone approaching retirement toward a safe, steady return. They combine hundreds or thousands of bonds into a single financial product that you can trade on an exchange.

Quick Look at the Best Bond ETFs:

• Vanguard Total Bond Market ETF
• Vanguard Total International Bond ETF
• iShares Core US Aggregate Bond ETF

Best Bond ETFs by AUM

The best bond ETF should feature investment grade securities — have low risk of default, track its benchmark closely and provide the right balance between ease-of-trade and low fees. 

Here are Benzinga’s top 3 bond ETFs by assets under management (AUM).

1. Vanguard Total Bond Market ETF (BND)

The Vanguard Total Bond Market ETF (NYSE: BND) is the largest fixed-income-based ETF in the world, with a total AUM at $239.04 billion. It comprises a diversified portfolio across 11,341 individual bond issuances and an expense ratio of 0.035% — among the best in the business. 

While BND is dominated by treasuries — 65.8% invested in U.S. Government debt – it also includes exposure to high-quality corporates with bonds from Verizon Communications (NYSE: VZ), JPMorgan Chase & Co. (NYSE: JPM) and Apple Inc. (NASDAQ: AAPL). The fund tracks the Bloomberg Barclays U.S. Aggregate Float Adjusted Index.

2. Vanguard Total International Bond ETF (BNDX)

Here’s another one from the Vanguard fund — the Total International Bond ETF – that gives investors exposure to international bonds that are in non-U.S. currency denominations. The index includes government, corporate, government agency and securitized non-U.S. fixed-income investments with maturities of more than 1 year. As of November 2024, this fund had 6,698 bonds, with the highest concentrations in Japan, France, Germany, Italy and the United Kingdom. The fund's 0.07% expense ratio gives it a cost advantage over other international bonds, with 73% of the underlying securities rated A or higher.

3. iShares Core US Aggregate Bond ETF (AGG)

The iShares Core U.S. Aggregate Bond ETF (NYSE: AGG) provides an easy, low-cost way to diversify your portfolio with U.S. investment-grade bonds. Based on total return over the last 5 years, AGG has outperformed 66% of funds in the Intermediate Core Bond Morningstar category, which includes 327 funds. 

The ETF boasts over 7,000 bonds covering 5 broad fixed-income sectors. Close to 70% of the fund is allocated to high-quality, government-backed securities, including U.S. Treasuries and agency mortgage-backed securities, with the remaining 30% spread among municipal securities, corporate bonds and non-corporate credit. This fund owns $118.66 billion in total net assets and its 0.03% expense ratio is over 90% cheaper than average funds in its Morningstar category.

Best Online Brokers for Bond ETFs

An online broker is probably the fastest and cheapest way to invest in bond ETFs. Most of what you’ll need to execute and track trades is only a button away. Here are the best online brokers to trade top ETFs.

1.  Firstrade

Best For

• Mobile Investing

Open an account securely through Firstrade's website

Firstrade offers several perks: access to over 2,200 commission-free ETFs, $0 minimum account opening balances and great customer service available to assist you through email, phone or chat. Through the Securities Investor Protection Corporation (SIPC) Firstrade offers up to $500,000 of insurance coverage, with a $250,000 limit for cash balances.

Research offerings are also in abundance, including daily, weekly and quarterly video commentary, a Market Heatmap to view all bearish and bullish areas, charting tools and breaking news and event updates from credible news providers like PR Newswire, Morningstar, Benzinga and Zacks. Firstrade also handles international accounts, with the exclusion of some countries. You can also enjoy extended-hour trading with a Firstrade account.

Best For

• Fund Investing

get startedsecurely through Charles Schwab's website

2. Charles Schwab

Charles Schwab immerses you in the ETF trading experience with its state-of-the-art platforms, a full learning center and awesome trading tools.  You can choose from over 400 bond ETFs — over 300 are commission-free. 

It offers 2 trading platforms, an intuitive web platform and a more advanced thinkorswim platform. The web platform offers objective fundamental research tools and technical analyses for confident trading. Thinkorswim is for serious ETF traders who want extensive onboarding resources, comprehensive charting and market monitors.

Why Invest in Bond ETFs?

Here are 3 reasons why bond ETFs should be part of your fixed-income portfolio.

• Regular income: Bond ETFs are usually attached to thousands of underlying bonds. Instead of semi-annual coupon payments, bond ETF investors receive a monthly interest payment. While the amount may vary, the monthly payments provide a regular income stream to invest or use.
• Easier to trade: Bonds do not attract as much attention as stocks because they are illiquid and not as exciting. Most investors aren’t looking to wade through the markets haggling over prices; they just want to buy bonds and hold onto them until maturity. Bond ETFs will provide liquidity that isn’t available with the underlying bonds.
• Safer than equities: Although bonds have historically returned less than equities, the smaller return is buffered by some level of safety. Provided the government or underlying company remains solvent, your bonds won’t default. And in the event of a liquidation, bondholders are paid before shareholders.

Bond ETFs Biggest Gainers and Losers

Bond ETFs are not immune to turbulence across the credit spectrum. In fact, they do not guarantee return to investors as much as conventional bond funds do. Bond ETFs are easily impacted by interest rate movements. Their value only increases when the prevailing interest rates decrease. 

Soaring interest rates only decrease the fund value. The risks greatly depend on the funds in your portfolio. This is why the selection process is crucial.

Here is a list of bond ETF investments — funds that were hit the most and least. Review these daily lists to assess the movement of individual ETFs in real-time.

Premarket Bond ETFs

You may trade in the premarket hours — 4 a.m. to 9:30 a.m. — when participation is voluntary. This trading session may offer inferior prices and less liquidity, so bid-ask spreads are common. Prices may move quickly in this environment.

Aftermarket Bond ETFs

ETFs can be traded after the close of the regular market session. Late-breaking news and events can affect your holdings. The trade volume is usually much lower than the premarket and regular market sessions. You may reap some short-term profits but be sure to weigh the benefits against the risks of aftermarket trading.

Experience Bond ETFs Your Way

Fixed-income securities and bonds can be a less volatile addition to your portfolio. Bond ETFs offer many other benefits besides a potentially lower risk profile, like income generation and diversification. 

With the right mix, your diversified basket of bonds will do more than just preserve your capital, even if you have relatively little capital to invest. And with a greater depth of available inventory, visibility into recent trades and access to most of the secondary market offers, you can get a better snapshot of a bond’s value and liquidity than ever before. It's time to leave the speculative penny stocks world and experience the big bond world! 

Frequently Asked Questions