Bond ETF

A Bond ETF (Exchange-Traded Fund) is a type of investment fund that trades on stock exchanges and is designed to track the performance of a specific index of bonds. These ETFs hold a portfolio of bonds, which can include government bonds, corporate bonds, municipal bonds, or other types of fixed-income securities. Unlike individual bonds, Bond ETFs can be bought and sold throughout the trading day at market prices, making them a flexible option for both short-term traders and long-term investors.

Example

An investor looking for diversified exposure to U.S. Treasury bonds might invest in a Bond ETF that tracks an index of various U.S. government bonds, allowing them to gain exposure to multiple bonds with a single purchase.

Key points

• Bond ETFs track the performance of a specific index of bonds.

• Provide diversification, liquidity, and low-cost access to the bond market.

• Traded on stock exchanges like individual stocks.

Quick Answers to Curious Questions

What are the benefits of investing in a Bond ETF?

Bond ETFs offer diversification, easy access to the bond market, and liquidity, as they can be traded throughout the day like stocks.

How does a Bond ETF differ from individual bonds?

Unlike individual bonds, which are typically bought and held until maturity, Bond ETFs can be traded daily and provide exposure to a portfolio of bonds.