11 Biggest Fixed Income ETFs in the US

The list of the biggest fixed income ETFs in the US will help you to find secure investment opportunities. When choosing fixed income options, most people are looking for large funds, worth billions of dollars that will secure them reliable dividends on an annual basis. Fixed income securities are very popular among retirees and other investors, who aren’t interested in riskier options that can bring them a higher gain.

Many small time investors choose ETFs, without even knowing their true nature or purpose. These funds have been around for the last 24 years, but they have become popular during the last decade. Exchange traded funds currently manage more than $1.34 trillion worth of assets, which is around 10% of the total assets held by investment companies.

ETFs have the same purpose as the index funds. They attract many small-time investors because they can provide a benchmark return at a very low cost. Unlike index funds, exchange traded funds in most cases don’t charge any commission, which makes them more affordable. Fixed income ETFs are even more reliable than the regular ones. They invest money in preferred stocks and bonds, which provide small, but reliable returns.

There are several types of fixed income ETFs, depending on the market segment they choose. These include the ones that invest in Municipal Build America Bonds, Corporate High Yield, Corporate Investment Grade, etc. The biggest fixed-income exchange traded funds are usually managed by the biggest and the most powerful asset management companies, including Black Rock, Vanguard and State Street Global Advisors.

Still, there are many ETFs out there that don’t work on the same principles as index funds. So, if you want to choose an option that will have secured dividends and a very low-risk rate, you should stick to the biggest and the most popular exchange traded funds on the market. These are very transparent when it comes to benchmark. The biggest funds can show off an elaborate trading history to prove that they always matched the widely known benchmarks and provided dividends to investors.

One of the reasons for making this list of biggest fixed income ETFs in the US was to make the quest for fixed income ETFs easier. On Insider Monkey we have several lists that deal with the fixed income securities. If you are looking for a reliable asset management company, check out our list of the biggest fixed income managers in the world.

The information about the fixed income options is hard to find. The ETF platform proved to be the best data source on exchange traded funds and the current market trends that concern the ETF investors. We have used the information about the funds’ assets that we have found on the ETF website’s list, for ranking the biggest fixed income ETFs in the US.  In addition to the list data, we have also visited the each fund’s page on the ETF platform and on the website of the company that manages it, to find more information about its characteristics, current state, and prospects.

11. SPDR Bloomberg Barclays High Yield Bond ETF (JNK)

Assets under management: $12.39 billion;

This ETF follows a wide range of liquid corporate bonds. It is very popular among investors, who are looking for fixed-income offers because of its diverse portfolio. All segments of the fund’s performance align with its benchmark, although its tracking is often messy. Investors have also made remarks about the costs, which at times tend to be much higher than advertised. Still, JNK is the 11^th biggest fixed-income in the United States, which means it has a huge amount of assets under management. The closing price for JNK usually ranges between $30 and $40.

10. Vanguard Intermediate-Term Bond ETF (BIV)

Assets under management: $14.00 billion;

BIV, next on our list of biggest fixed income ETFs in the US has much higher closing price than JNK, which on 7/28/2017 was higher than $80. The fund tracks the whole fixed income market and focuses on bonds with one – to ten-year maturities. Vanguard Intermediate-Term Bond ETF’s main rival is GVI, but their bonds have much shorter average maturity. The BIV has a high secondary liquidity since its portfolio consists of bonds that mature between five and ten years. If you plan to invest money in BIV, you should also know that the Fund Quality score of this ETF is 5.7 out of 10.

9. Vanguard Intermediate-Term Corporate Bond ETF (VCIT)

Assets under management: $15.75 billion;

Vanguard Intermediate-Term Corporate Bond ETF tracks corporate bonds with from five to 10-year maturity. They prefer bonds from the industrial sector, so their portfolio and sector coverage resembles the market situation. One of the best benefits that VCIT offers are very low expense ratios. This is even more beneficial when we take into consideration that there are many other ETFs with competitive prices in this segment. In addition to this, the VCIT ETF that ranked 9th on our list of biggest fixed income ETFs in the US offers deeper liquidity than its biggest rivals.

 

8. iShares U.S. Preferred Stock ETF (PFF)

Assets under management: $18.65;

PFF is managed by Black Rock, one of the biggest asset management companies in the world. It is an open-ended fund, which follows preferred corporate stocks, on the biggest US exchange markets. This ETF focuses on different types of securities, and it has a very broad portfolio. The PFF’s holdings are reassembling the market nature. The fund is charging a competitive fee, and it is much more affordable than peer ETFs. The best benefit of iShares U.S. Preferred Stock ETF is its strong block liquidity, which is highly attractive to big traders.

7. iShares iBoxx $ High Yield Corporate Bond ETF (HYG)

Assets under management: $18.75 billion;

HYG has a high closing price and manages more than $18 billion assets. The fund tracks US high-yield corporate bonds and debt. It is known as one of the biggest junk bonds in the country since it focuses on a huge part of the very liquid junk bond market. This ETF sometimes charges more money than some peer funds. Still, it is very hard to compare the prices and the gain in this segment, since iShare iBoxx $ High Yield Corporate Bond ETF doesn’t always follow the industry convention. Sometimes they just calculate index factors in transaction costs.

6. Vanguard Short-Term Corporate Bond ETF (VCSH)

Assets under management: $20.11 billion;

VCSH is one of the biggest fixed income ETFs in the US. It competes in the short term corporate investment grade segment and has an $80 closing price (70/28/2017). This means that it primarily focuses on fixed-rate corporate bonds that need one to five years to mature. Although the purpose of VCSH is to provide regular income with modest risks and price fluctuations, it can be very sensitive to interest-rate changes. Vanguard traditionally offers very low holding and trading costs and an expense ratio that is 91% lower than all other funds that compete in this segment.

5. Vanguard Short-Term Bond ETF (BSV)

Assets under management: $22.21 billion;

Same as other similar Vanguard funds the BSV, next on our list of biggest fixed income ETFs in the US, comes with a very low expense ratio. It follows the Bloomberg Barclays index and trades dollar denominated, and investment-grade bonds. Vanguard Short-Term Bond portfolio contains treasuries, as well as various corporate bonds and foreign debt that has been issued in the United States. The term ‘short-term’ in the fund’s name means that they track bonds with one to five years maturity. Investing in this fund comes at a very low cost. BSV manages to keep it affordable by maintaining a strong trading volume and by thoroughly tracking the market. One of the biggest disadvantages with this ETF is that its holdings are posted on a monthly basis, which makes it much less transparent than rival funds.

4. iShares TIPS Bond ETF (TIP)

Assets under management: $23.09 billion;

We are continuing our list of biggest fixed income ETFs in the US with ETF that tracks the securities issued by the US Treasury. TIP was launched 14 years ago, and during the first three years, it was just collecting funds before its first competitor has entered the market. This fund relies on the never-ending trading cycle. Since we are talking about one of the biggest funds in the world, they have a huge trading volume, which drastically decreases their costs and attracts even more assets. iShares TIPS Bond ETF also has a very diverse and liquid portfolio. Its main competitor is SCHP, which offers lower holding costs, but also comes with a much lower trading volume.

3. Vanguard Total Bond Market ETF (BND)

Assets under management: $34.71 billion;

BND tracks a very broad index that is dominated by dollar-denominated, fixed income securities. Since three other funds are also tracking the same index, the BND has a huge portfolio on its disposal. This drastically decreases its costs. Apart from being the most affordable fund in its segment, BND also offers the broadest choice of bonds, with more than 10,000 different options. Unfortunately, managing such a broad portfolio has its downsides. That is why BND comes with higher volatility and lower efficiency score than its peers. This fund is the best choice for real estate and institutional investors who are looking for a reliable fixed income offers.

2. iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)

Assets under management: $37.61 billion;

On 7/28/2017 LQD had an incredibly high closing price of $120. This huge Exchange traded fund follows a very broad index of corporate bonds with various maturity lengths. It is also one of the most popular ETFs in the United States and the world. The LQD’s popularity is mainly being driven by very high liquidity, diverse portfolio, and an incredibly high AUM. The fund only focuses on bonds with at least three-year maturity. Although this slightly increases its interest rate risk, the fund wins over investors with its low expenses and high liquidity.

1. iShares Core U.S. Aggregate Bond ETF (AGG)

Assets under management: $48.35 billion;

At the moment iShares Core U.S. Aggregate Bond has the highest worth of assets under management. That is why it is the best-ranked fund on our list of biggest fixed income ETFs in the US. In July 2017 the AGG’s closing price revolved around $100. Since AGG is a low-cost fund with highly predictable outcomes, it is one of the most popular investment choices among retirees and other investors who are looking for fixed income options. AGG tracks the same index as BND, SCHZ, and BNDS. Of course, we are talking about US invested-grade bonds. Comparing to other funds that deal with these options, the iShares Core U.S. Aggregate Bond ETF offers the best exposure to the US bond market and a very deep liquidity, which definitely makes it the best pick.