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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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6 Bond ETFs for Today's Market |
The Motley Fool - Aug. 23, 2010 - by Amanda B Kish
In case you haven't noticed, bonds are the new black.
Shaken by recent years' stock market turmoil, investors are showing no sign of dialing back their appetite for fixed income. According to data from the Investment Company Institute, bond funds attracted more assets than equity funds for the past 30 straight months. That amounts to billions and billions of dollars heading out of stocks and into bonds. And given recent economic weakness, it doesn't look like investors are terribly motivated to make peace with stock funds anytime soon.
While this massive flight-to-safety movement will likely leave many investors disappointed when interest rates eventually head north, bonds should still be an essential part of every investor's portfolio. While younger folks with decades still ahead of them probably don't need more than 10% or so of their portfolio in bonds, individuals in retirement should have at least half of their assets, at a bare minimum, allocated to fixed-income securities. If you're wondering how you can best stock up on bond exposure, you might want to consider some of the following exchange-traded fund options.
Taking in the big picture
If you're looking to get wide exposure to the bond market in one stop, a broad-market ETF is probably your best bet. One of the larger bond ETFs around is the iShares Barclays Aggregate Bond Index (NYSE: AGG). This fund invests in an array of government, mortgage, corporate, and even foreign bonds, covering most of the major corners of the market. Better yet, a low 0.24% expense ratio won't eat away at your savings.
Likewise, the Vanguard Total Bond Market ETF (NYSE: BND) also invests in a wide swath of fixed-income sectors, similar to the iShares Aggregate fund. However, this fund only costs about half that of its rival, with a 0.12% price tag. Although this ETF has only been around for a little more than four years, the index-fund version has been in existence for nearly 24 years and has outperformed almost four-fifths of all intermediate-term bond funds over the past decade and a half.
Special teams funds
While inflation certainly hasn't been a threat recently, plenty of investors remain convinced that prices are set to rise exponentially as soon as the economy can get even marginally back on track. That mind-set has no doubt contributed to the iShares Barclays TIPS Bond ETF (NYSE: TIP) becoming the largest bond ETF around, with $20.5 billion in net assets. Treasury-inflation protected securities are linked to inflation, so investors get a higher interest payment when inflation rises. Maintaining purchasing power is a prime concern for investors in retirement, so having an allocation to inflation-protected bonds is a smart idea. This particular fund is one of the best options for ETF investors who want to protect their investments against the ravages of future inflation.
Of course, investors shouldn't forget that there is a global bond market beyond U.S. borders. To get cheap exposure to worldwide government bonds, you might want to consider SPDR Barclays Capital International Treasury Bond (NYSE: BWX). This fund invests in the sovereign debt of a wide variety of developed nations such as Japan and the U.K., along with a dash of emerging-market exposure from countries like Mexico and South Africa. However, overall credit quality is pretty strong here, with an average AA rating, so risk levels shouldn't be abnormally high.
Tactical plays
Given that interest rates pretty much have nowhere to go but up, bond investors would be well-advised to keep an eye on the duration of their bond funds. A higher duration means that a fund's price will suffer more when interest rate rise. If you want to protect yourself from falling bond prices, a smart move would be to invest in a few bond funds with shorter-term outlooks.
For the complete article visit The Motley Fool
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