Investing in US Bonds
Fund facts and descriptions that help make the world of ETFs a little easier to understand.
The US government has never missed a payment
Why would they? They have the power to raise taxes and print more money if they need. That’s why many consider US bonds some of the safest of all investments. Generally returns are lower. But they’re safer.
In previous blogs, we showed how you can find investments in the total US stock market and investments in foreign markets. Here we’ll see some that hold US bonds, the third and final piece of the pie recommended for your portfolio by famous investor Benjamin Graham.
What’s a bond?
A bond is a loan that you give to a company or government (in this case it’s the US government). In exchange, you’re promised a little money (called interest) each year. At a specified future date, you’ll get back the original amount of money you loaned.
What’s an ETF?
ETFs (Exchange-Traded Funds) are collections of assets like stocks and bonds that are brought together to mimic movements of a certain market, industry, or country.
You can buy shares of an ETF like you buy shares of a stock. Unlike mutual funds, ETFs trade throughout the day on a stock exchange.
Some ETFs hold bonds, so you can essentially buy bonds on a stock exchange.
Fund facts — 3 ETFs that track US bonds
I need to be clear — these aren’t recommendations. I’m trying to make this financial information easier to digest. That’s all. With this, you can do your own research and make your own decisions.
These are three of the most popular ETFs based on daily trading volume. You can see the top 100 here.
I’m working on a way to automatically update these numbers, but they’re accurate as of January 17th, 2017. Source: ETFdb.com
iShares Core US Aggregate Bond ETF
Price: $109
How much you’ll pay for one share
Ticker Symbol: AGG
Abbreviation used in the stock market
Popularity Rank: 88
Out of all ETFs, based on average daily trading volume
1-Year Return: +1.02%
How much the price has gone up or down in the past year. Average 1-year return for ETFs in the same category: +3.81%
Annual Dividend Yield: 1.39%
Extra cash paid out to you each year. Equal to the share price multiplied by the dividend yield (e.g. $100 price per share x 5% dividend yield = $5 dividend). Average dividend yield for ETFs in the same category: 2.03%
Expense Ratio: 0.05%
Annual fee you’re charged to pay for the operational costs that go into managing the ETF. Average expense ratio for ETFs in the same category: 0.35%
Top 10 Holdings:
Fnma 30yr 2015 Production
US Treasury Note 3.625%
Gnma2 30yr 2015 Production
Fgold 30yr 2015 Production
US Treasury Note 2.125%
Gnma2 30yr 2016 Production
US Treasury Bond 4.25%
Fgold 30yr 2015 Production
US Treasury Note 0.875%
Fnma 15yr 2015 Production
Total Bond Market ETF
Price: $81
How much you’ll pay for one share
Ticker Symbol: BND
Abbreviation used in the stock market
Popularity Rank: N/A (outside top 100 overall, but ranked 2nd for Total Bond Market ETFs)
Out of all ETFs, based on average daily trading volume
1-Year Return: +2.18%
How much the price has gone up or down in the past year. Average 1-year return for ETFs in the same category: +3.81%
Annual Dividend Yield: 2.47%
Extra cash paid out to you each year. Equal to the share price multiplied by the dividend yield (e.g. $100 price per share x 5% dividend yield = $5 dividend). Average dividend yield for ETFs in the same category: 2.03%
Expense Ratio: 0.08%
Annual fee you’re charged to pay for the operational costs that go into managing the ETF. Average expense ratio for ETFs in the same category: 0.35%
Top 10 Holdings:
Ginnie Mae Jumbos TBA 3.5% 2046–11–01
US Treasury Note 2.125%
Fannie Mae Single Family TBA 3% 2046–11–01
US Treasury Note 1%
US Treasury Note 1.5%
US Treasury Note 3.625%
US Treasury Note 2.625%
US Treasury Note 2.25%
US Treasury Note 1%
US Treasury Note 1.25%
Short-Term Bond ETF
Price: $80
How much you’ll pay for one share
Ticker Symbol: BSV
Abbreviation used in the stock market
Popularity Rank: N/A (outside top 100 overall, but ranked 3rd for Total Bond Market ETFs)
Out of all ETFs, based on average daily trading volume
1-Year Return: +1.02%
How much the price has gone up or down in the past year. Average 1-year return for ETFs in the same category: +3.81%
Annual Dividend Yield: 1.47%
Extra cash paid out to you each year. Equal to the share price multiplied by the dividend yield (e.g. $100 price per share x 5% dividend yield = $5 dividend). Average dividend yield for ETFs in the same category: 2.03%
Expense Ratio: 0.10%
Annual fee you’re charged to pay for the operational costs that go into managing the ETF. Average expense ratio for ETFs in the same category: 0.35%
Top 10 Holdings:
US Treasury Note 1.25%
US Treasury Note 1.5%
US Treasury Note 1.25%
US Treasury Note 1.625%
US Treasury Note 1.375%
US Treasury Note 1.125%
US Treasury Note 1.375%
US Treasury Note 1.375%
US Treasury Note 1.25%
US Treasury Note 1.125%
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