ETF Talk

Bond-Focused Fund with Enormous Holdings in U.S. Treasuries

The exchange-traded fund (ETF) Vanguard Total Bond Market ETF (BND) is one of the biggest in the bond sector.

BND invests 98% of its $33.71 billion total assets in U.S. investment-grade bonds, with a goal to keep pace with U.S. bond market returns. The fund manages a massive portfolio, which consists of 17,426 different types of bonds to give BND the broadest exposure to U.S. bonds.

All of the bonds in BND’s portfolio have maturities of at least one year, and no single bond type takes up more than 1% of BND’s overall portfolio. Of course, managing such a broad portfolio is difficult, and that may have contributed to volatility in the fund that is higher than its peers.

With a yield of 2.44% and an expense ratio of only 0.06%, which is lower than 92% of funds with similar bond holdings, Vanguard recommends BND as a source of reliable income for the long term. It also serves as a good way to diversify the risks of stocks in investors’ portfolios.

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