Best ETFs: Medium-Term Bonds



These exchange-traded funds own bonds with maturities averaging between 3 and 9 years.

If you want a portfolio that mirrors the whole bond market—defined to exclude junk, foreign, tax-exempt and inflation-protected bonds—ETFs from four vendors will serve you well. The total-bond-market offerings from State Street, Schwab, BlackRock and Vanguard, in the third through sixth positions on the cost-efficiency ranking, are very similar. Each:

—has a duration close to 6 years, meaning that the fund’s share price is as sensitive to interest rate movements as a zero-coupon bond due in 6 years.

—puts roughly a fourth of assets in corporate bonds, with most of the rest in bonds issued or guaranteed by the federal government.

—yields a little over 3%.

—offers fixed-income management at a bargain price.

No law says a fixed-income portfolio has to match the market. The first two funds on our list, both iShares from BlackRock, put most of their money in corporate debt. They have yields similar to those of the total market funds. They combine a higher credit risk with a lower interest-rate risk. They win the cost-efficiency competition with a hefty dose of securities lending.

Investors concerned about credit risk can go in the other direction, with a fund that has no corporate debt. In the second category for medium-term bonds we have ETFs that own only Treasurys and Treasury-backed paper like Ginnie Maes. Yields are a little lower and average credit quality is usually AAA (as opposed to AA on the total-market funds).

The focus in this survey is on cost efficiency. To compare funds on duration, credit quality and yield, go to Morningstar.

Best ETFs: Medium-Term Bonds


 Ticker  Exchange-Traded Fund Holding Cost1 Liquidity Score2 Assets ($bil)
CIU iShares Intermediate Credit Bond*
$37 A 6.9
CRED iShares US Credit Bond*
42 B 1.5
SPAB SPDR Portfolio Aggregate Bond*
65 B 2.8
SCHZ Schwab US Aggregate Bond* 68 A 5.0
AGG iShares Core US Aggregate Bond 78 A+ 55.3
BND Vanguard Total Bond Market 83 A+ 36.4
IUSB iShares Core Total USD Bond Market 99 B 2.1
IMTB iShares Core 5-10 Year USD Bond 104 D 0.04
SPIB SPDR Portfolio Interm Term Corp Bd 110 A 3.3
VCIT Vanguard Interm-Term Corp Bd 116 A 18.3
VCSH Vanguard Short-Term Corporate Bond 116 A 20.9
BIV Vanguard Interm-Term Bond 117 A 14.8
PBND PowerShares PureBeta US Aggt Bd 130 F 0.02
IBDO iShares iBonds Dec 2023 Term Corp 146 C 0.4
IBDN iShares iBonds Dec 2022 Term Corp 151 B 0.4
IBDP iShares iBonds Dec 2024 Term Corp 153 C 0.2
IBDQ iShares iBonds Dec 2025 Term Corp 164 D 0.3
BYLD iShares Yield Optimized Bond 165 C 0.04
IBCE iShares iBonds Mar 2023Tm CorpexFncl 168 D 0.04
BSCL PowerShares BulletShrs 2021 Corp Bd 172 B 0.9
BSCM PowerShares BulletShrs 2022 Corp Bd 172 B 0.7
BSCP PowerShares BulletShrs 2025 Corp Bd 185 C 0.1
BSCO PowerShares BulletShrs 2024 Corp Bd 190 C 0.3
IBDD iShares iBonds Mar 2023 Term Corp 191 D 0.1
BSCN PowerShares BulletShrs 2023 Corp Bd 192 C 0.3
BSCQ PowerShares BulletShrs 2026 Corp Bd 197 D 0.1
IBDS iShares iBonds Dec 2027 Term Corp 198 C 0.1
BSCR PowerShares BulletShrs 2027 Corp Bd 198 D 0.02
AGGY WisdomTree Barclays YldEnh US AggtBd 203 B 0.4
LQD iShares iBoxx $ Invmt Grade Corp Bd 204 A+ 32.0
IBDR iShares iBonds Dec 2026 Term Corp 205 D 0.1
QLTA iShares Aaa – A Rated Corporate Bond 219 C 0.1
GIGB Goldman Sachs Acss Invmt Grd Corp Bd 249 C 0.2
IGEB iShares Edge Investment Grade Enh Bd 320 D 0.03
GVI iShares Intermediate Govt/Crdt Bd 325 B 1.9
SUSC iShares ESG USD Corporate Bond 333 D 0.01
GBF iShares Government/Credit Bond 347 C 0.1
NUBD NuShares ESG US Aggregate Bond 354 D 0.03
NUAG NuShares Enhanced Yield US Aggt Bd 355 D 0.1
SKOR FlexShares Credit-Scored US Corp Bd 381 D 0.1
FIBR iShares Edge US Fixed Income Bal Rsk 388 C 0.1
PFIG PowerShares Fundamental InvGr CorpBd 392 C 0.1
CMBS iShares CMBS 447 D 0.2
CJNK SPDR ICE BofAML Crossover Corp Bd 566 D 0.1
PPTB Portfolio+ Total Bond Market 571 D 0.02
FLCO Franklin Liberty Investment Grd Corp 591 D 0.04
FBND Fidelity Total Bond 593 B 0.4
BNDC FlexShares Core Select Bond 605 D 0.02
FCOR Fidelity Corporate Bond 613 D 0.1
HTRB Hartford Total Return Bond 660 F 0.02
UITB USAA Core Intermediate-Term Bond 660 C 0.1

Treasury and government-backed bonds

SCHR Schwab Intermediate-Term US Trs*
101 A 1.4
VGIT Vanguard Intmdt-Term Trs*
116 A 1.7
VMBS Vanguard Mortgage-Backed Secs 118 A 5.2
MBB iShares MBS 148 A 12.1
ITE SPDR Blmbg Barclays Interm Term Trs 163 B 0.7
IEF iShares 7-10 Year Treasury Bond 244 A+ 8.6
IEI iShares 3-7 Year Treasury Bond 244 A 7.2
GOVT iShares US Treasury Bond 249 A 5.5
GNMA iShares GNMA Bond 289 C 0.1
AGZ iShares Agency Bond 334 B 0.4
MBSD FlexShares Disciplined Duration MBS 352 D 0.05
MBG SPDR Blmbg Barclays Mortg Backed Bd 358 C 0.2

*Best ETFs Honor Roll Member

1 Cumulative cost of holding a $10,000 position for a decade. Incorporates annual expense ratio, bid/ask spreads and cost offset from securities lending. 2Reflects bid/ask spreads and trading volume. A = easy to trade.

Data sources: Morningstar; Bloomberg; fund distributors.

Best ETFs: How we rated 737 funds

Best ETFs: Short-Term Bonds

Best ETFs: Long-Term Bonds

Best ETFs: Junk Bonds

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