Bond ETFs Are Starting to Turn More Heads
May 05, 2020 at 17:00 PM EDT
“I think one of the biggest stories we’ve seen, particularly from last year or so, has been flows into fixed-income products. It feels like folks are starting to understand that market, and the market continues to evolve,” Ryan Ludt, Global Head of ETF Capital Markets and Index Relations, Vanguard, said at the Inside ETFs conference. According to XTF data, Vanguard fixed-income ETFs attracted $34.6 billion in net inflows in the past year. Among its most popular bond ETF plays, the Vanguard Total Bond Market ETF ( BND A ) attracted $9.9 billion in inflows over the past year. BND provides investors with broad exposure to U.S. investment-grade bonds and can act as a core component in any long-term investment strategy, helping investors produce reliable income. The Vanguard Total International Bond Index Fund ETF Shares ( BNDX A- ) also brought in $9.6 billion in inflows over the past year. BNDX seeks to track the performance of a benchmark index that measures the investment return of international non-U.S. dollar-denominated investment-grade bonds. Additionally, the ETF includes a U.S. dollar currency hedge to limit the harmful effects of foreign exchange or forex swings. Additionally, the Vanguard Short-Term Government Bond ETF ( VGSH A ) saw $3.4 billion in net inflows. VGSH tracks short-term Treasuries, which provides in a portfolio carrying very little interest-rate and credit risk. While this fund will not generate spectacular results, it will deliver consistent returns and provide strong downside protection.