Best ETFs: Medium-Term Bonds

Retirement

These funds own bonds with maturities averaging between three and nine years.

There’s some risk with these funds, mostly related to interest rates, but not a lot. A one-percentage-point spike in the yield curve would cause a price decline in the neighborhood of 6%.

The first of these tables covers portfolios that either have only corporate bonds or have a mix that includes U.S. Treasurys. The broad bond market funds, like Vanguard Total Bond Market (BND) and iShares Core U.S. Aggregate Bond (AGG), are weighted to Treasury paper because there’s a lot of that stuff floating around.

The second table has funds that own only bonds issued or guaranteed by the government. Two of those govvie funds make it onto our Honor Roll of cheap, liquid ETFs. But they aren’t an optimum choice for everyone who needs a fixed-income allocation. Investors with $250,000 or more can often do better by just buying one Treasury note of suitable maturity.

For an explanation of our rankings and a directory of fund categories, turn to Forbes Best ETFs.

*Honor Roll member. For the full list, turn to Best ETFs Honor Roll.

For a searchable directory of fund names and tickers, use the ETF Directory.

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