Bond ETF
An exchange-traded fund that holds a portfolio of bonds, offering diversified fixed-income exposure with the liquidity and tradability of stocks.
What is Bond ETF?
A bond ETF is an exchange-traded fund that holds a portfolio of fixed-income securities—such as Treasury bonds, corporate bonds, or mortgage-backed securities—and trades on stock exchanges throughout the day at market prices. Unlike individual bonds (which require minimum purchase sizes and have limited secondary market liquidity) or bond mutual funds (which price only once daily), bond ETFs offer intraday liquidity, price transparency, and access to broad fixed-income diversification with low minimum investments. Large bond ETFs include iShares Core U.S. Aggregate Bond ETF (AGG) and Vanguard Total Bond Market ETF (BND), which track the Bloomberg U.S. Aggregate Bond Index.
Example
An investor wanting broad exposure to the U.S. investment-grade bond market purchases shares of the iShares Core U.S. Aggregate Bond ETF (AGG). With a single ETF holding over 10,000 bonds including Treasuries, agency bonds, and corporate bonds, the investor achieves instant diversification across the U.S. fixed-income market at an expense ratio of just 0.03%.
Source: BlackRock — iShares AGG ETF