Bond ETF

A bond ETF holds a portfolio of bonds and trades on stock exchanges like a regular ETF. These funds provide access to fixed-income markets — government, corporate, municipal, or international bonds — with lower minimums and better liquidity than buying individual bonds.

Types of Bond ETFs:

Type	Example	Yield Range	Risk
US Treasury	SHY, IEF, TLT	3.5%–4.5%	Low
Investment Grade Corp	LQD	4.5%–5.5%	Low-Medium
High Yield ("Junk")	HYG, JNK	6%–8%	Medium-High
Municipal	MUB	2.5%–3.5% (tax-free)	Low
International	BNDX	3%–5%	Medium
TIPS (Inflation-Protected)	TIP	2%–3% + inflation	Low
Aggregate Bond	BND, AGG	4%–5%	Low-Medium

Bond ETFs vs Individual Bonds:

Feature	Bond ETF	Individual Bond
Diversification	Hundreds of bonds	Single bond
Minimum investment	~$100	$1,000–$10,000
Liquidity	Trade anytime	May be illiquid
Maturity	Rolling (no maturity date)	Fixed maturity
Price certainty at maturity	No	Yes (par value)
Income	Monthly distributions	Semi-annual coupons

Key Concepts:

• Duration — sensitivity to interest rate changes (longer = more volatile)
• Credit quality — investment grade vs high yield
• Yield to maturity — expected annual return if held to maturity
• Interest rate risk — when rates rise, bond prices fall

Important Difference from Individual Bonds: Bond ETFs never "mature" — they continuously roll expiring bonds into new ones. This means you don't get the par value certainty of holding a single bond to maturity. (Target maturity bond ETFs like iBonds are an exception.)