Kiplinger’s Jeffrey Kosnett recently published a primer on investing with Exchange Traded Funds and included a list of 10 ETFs that you need to know.
The funds making Kosnett’s 10 “to know” list include:
SPDR Barclays Capital High Yield Bond ETF (JNK)
iShares S&P-Citigroup International Treasury Bond Fund (IGOV)
S&P Global Utilities Sector Index Fund (JXI)
iBoxx $ Investment Grade Corporate Bond Fund (LQD)
In the column ETF Portfolios for Every Purpose, Kiplinger’s Jeffrey Kosnett recently outlined a series of all ETF portfolios with the idea that you can pursue any goal with nothing more than exchange-traded funds.
Kosnett’s all ETF Growth and Income portfolio includes these funds:
More and more investors have been moving money into Bond ETFs according to WSJ reporter John Spence.
In the article, Bond ETFs Draw a Surge of Funds, Spence reports that the two best selling fixed income ETFs in the iShares line-up are bond funds. In fact, the iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD) has seen net inflows of nearly $5 billion.
Junk bond ETFs have also done well including the iShares iBoxx $ High Yield Corporate Bond Fund (HYG) and the SPDR Barclays Capital High Yield Bond ETF (JNK).
Spence also points out that inflation fears flamed by loose monetary policy and unprecedented government spending have investors putting money into Treasury Inflation Protected Securities or TIPS. For example, the iShares Barclays TIPS Bond Fund (TIP) has doubled in 2009.
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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:
Corporate – iBoxx Investment Grade Corporate Bond Fund (LQD), iBoxx High Yield Corporate Bond Fund (HYG)
Shorter term – iShares Barclays Intermediate Credit Bond (CIU), iShares MBS Bond Fund (MBB)
Munis - iShares S&P National Municipal Bond (MUB), Powershares Insured National Municipal Bond Portfolio (PZA), Market Vectors Long Municipal Index (MLN)
For a complete listing of fixed income ETFs, see the ETF Directory
