For investors willing to look beyond cash for yield, bonds are the next step up the risk ladder. The WSJ‘s Jonathan Burton explores how ETFs can play a role in his article Using ETFs for Bond Bets.
Building a diversified portfolio of individual bonds is hard and expensive for most investors, so funds are the better way to go. ETFs have an advantage over actively managed mutual funds due to their low cost, flexible trading and tax efficiency.
To get started in Bond ETFs, Burton points out that many advisors recommend iShares Barclays Aggregate Bond Fund (AGG) for exposure to a broad mix of bonds. A similar offering is the Vanguard Total Bond Market ETF (BND).
Other ETFs mentioned in the article:
For a complete listing of fixed income ETFs, see the ETF Directory