Active equity managers struggle to consistently beat their benchmark. The most widely cited evidence comes from the ongoing S&P Indices Versus Active (SPIVA) study.
According to the most recent update as of Dec. 31, 2024, 76.3% of actively managed large-cap U.S. equity funds underperformed the S&P 500 over the previous five years. Similar results held across other categories, including small caps, mid caps, value, growth and international equities.
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But fixed income is a notable exception. Over the same five-year period, only 57.9% of general investment-grade bond funds lagged behind the iBoxx $ Liquid Investment Grade Index.
Even better performance was seen in more complex corners of the bond market. For instance, just 54.2% of high-yield bond funds underperformed the iBoxx $ Liquid High Yield Index.
The standout was the investment-grade short- and intermediate-term category, where only 28.9% of funds underperformed the iBoxx $ Overall 1-5Y Index.
A major reason for this divergence is the structural complexity of fixed-income markets. Compared to equities, bonds often have less liquidity and price transparency. They also come with more complex mechanics, such as duration, credit quality, call features and varying tax treatments. These nuances give active fixed-income managers more tools to work with and more inefficiencies to exploit.
Thanks to exchange-traded funds (ETFs), investors now have access to many of these active fixed-income strategies in a liquid, transparent and cost-effective structure.
“Rich stock prices and attractive current yields are creating demand for bond ETFs — particularly actively managed ETFs — which helps investors who are seeking portfolio diversification with the additional profit potential that comes from active tilts,” says Stephen McFee, senior portfolio manager at Vanguard.
Here’s a look at nine of the best bond ETFs to buy for 2025:
| ETF | Expense ratio | 30-day SEC yield |
| Vanguard Ultra-Short Bond ETF (ticker: VUSB) | 0.10% | 4.7% |
| DoubleLine Commercial Real Estate ETF (DCRE) | 0.40% | 5.4% |
| Roundhill Weekly T-Bill ETF (WEEK) | 0.19% | TBD* |
| iShares Intermediate Government/Credit Bond ETF (GVI) | 0.20% | 4.1% |
| SPDR Portfolio Long Term Treasury ETF (SPTL) | 0.03% | 4.7% |
| BondBloxx BBB Rated 1-5 Year Corporate Bond ETF (BBBS) | 0.19% | 4.7% |
| BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC) | 0.40% | 11.4% |
| BondBloxx Private Credit CLO ETF (PCMM) | 0.68% | 7.3% |
| Invesco Senior Loan ETF (BKLN) | 0.65% | 7.6% |
*WEEK began trading on March 6, and its 30-day SEC yield has not yet been established.
Vanguard Ultra-Short Bond ETF (VUSB)
“Investors have seen bond ETFs successfully weather multiple storms in the markets, including the pandemic sell-off in March 2020,” says John Croke, head of investor choice business activation at Vanguard. “Time and again, bond ETFs have demonstrated their resilience and liquidity for investors.”
For liquidity management, Vanguard offers VUSB. This actively managed bond ETF targets high-quality money market instruments with an average maturity of two years or less. It is designed to provide stability and monthly income. Investors can currently expect a 4.7% 30-day SEC yield.
DoubleLine Commercial Real Estate ETF (DCRE)
“Mortgage-backed securities (MBS) ETFs offer yields that are comparable to investment-grade corporate bonds, accompanied with high credit quality and monthly cash flows,” says Dave P. Francis, investment advisor and principal at Bartlett Wealth Management. DCRE offers exposure to MBS, but with a twist.
This ETF focuses on commercial mortgage-backed securities (CMBS), which are backed by pools of loans made to income-producing properties like office buildings, shopping centers, hotels and apartment complexes. More than 83% of DCRE’s holdings are rated AAA. The ETF pays a 5.3% 30-day SEC yield.
Roundhill Weekly T-Bill ETF (WEEK)
“Often overlooked in bond ETFs is liquidity — the ability to buy or sell the security quickly, easily and without a large spread,” says Daniel Dusina, chief investment officer at Blue Chip Partners. “A bond ETF’s liquidity, for the most part, is driven by the liquidity of its underlying securities.”
The most liquid bonds are U.S. Treasury bills, or T-bills. Investors can own these securities via WEEK, which invests in zero-to-three-month maturity T-bills. Uniquely, this ETF pays distributions every week, which may appeal to investors seeking regular income. WEEK charges a 0.19% expense ratio. Just note that, as a very newly launched ETF — it began trading on March 6 and has only about $7 million in assets under management — its 30-day SEC yield has not yet been established at the time of this writing.
iShares Intermediate Government/Credit Bond ETF (GVI)
“Intermediate-term bond ETFs invest in bonds with maturities between three and 10 years,” says Wes Moss, managing partner and chief investment strategist at Capital Investment Advisors. “They offer a balance between risk and return and are suitable for investors who have a medium-term horizon.”
GVI tracks the Bloomberg U.S. Intermediate Government/Credit Bond Index. This hybrid benchmark combines both Treasurys and investment-grade corporate bonds with maturities ranging from one to 10 years. It charges a 0.2% expense ratio and currently pays a 4.1% 30-day SEC yield.
[READ: 7 Best Treasury ETFs to Buy Now]
SPDR Portfolio Long Term Treasury ETF (SPTL)
“Long-term bond ETFs invest in bonds with maturities of more than 10 years, are more sensitive to interest rate changes and may experience greater volatility in their returns,” Moss says. “They are suitable for investors who have a long-term investment horizon and can tolerate higher levels of risk.”
SPTL tracks the Bloomberg Long U.S. Treasury Index. With an average duration of 14.7 years, the price of this ETF is very sensitive to changes in long-term interest rates. That being said, it is especially affordable thanks to a minimal 0.03% expense ratio. SPTL currently pays a 4.7% 30-day SEC yield.
BondBloxx BBB Rated 1-5 Year Corporate Bond ETF (BBBS)
“BBBS is one of our top picks in 2025 because we like the combination of its attractive income potential and low volatility compared to longer-dated fixed-income asset classes,” says JoAnne Bianco, partner and senior investment strategist at BondBloxx. BBB is the minimum rating for investment-grade bonds.
BBBS trades with a 0.19% expense ratio and currently pays a 4.7% 30-day SEC yield. “‘BBB-rated corporate bonds are persistent outperformers within the U.S. investment-grade universe, driven by their historically higher average coupon income compared to broad U.S. corporate indices,” Bianco explains.
BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC)
Going below BBB in credit rating takes investors down to high-yield junk bonds. These have a greater risk of default but pay higher yields. A good example of this in play is XCCC, which, as its name suggests, owns bonds rated CCC and pays a very high 11.4% 30-day SEC yield to compensate investors for the risk.
“XCCC has been one of the top-performing fixed-income ETFs for two years in a row, and it remains one of our top picks for 2025 as we expect the fund to continue to benefit from resilient high-yield fundamentals,” Bianco explains. “The ETF’s diversification reduces one of the main risks of investing in the CCC category, namely the idiosyncratic risk that comes from picking individual bonds.”
BondBloxx Private Credit CLO ETF (PCMM)
ETFs can now offer access to private credit strategies that were traditionally limited to accredited investors. A recently launched example is PCMM, which provides exposure to collateralized loan obligations (CLOs). These are securitized bundles of loans typically made to mid-sized companies, that are grouped together and sold in tranches with varying levels of risk and return.
“We like private credit’s potential for compelling yield and total return performance, along with the low volatility it provides,” says Tony Kelly, co-founder of BondBloxx. “We launched PCMM in response to consistent requests from our clients for exposure to private credit.” The ETF currently pays a 7.3% 30-day SEC yield and charges a 0.68% expense ratio.
Invesco Senior Loan ETF (BKLN)
Another way to get private credit-like exposure is through senior loans. These are typically issued to below-investment-grade companies, but sit higher in the capital structure than traditional high-yield bonds. These loans also have floating interest rates, meaning their yields adjust upward if rates rise.
Since individual senior loans can be hard to access, ETFs like BKLN offer a convenient entry point. The fund tracks the Morningstar LSTA U.S. Leveraged Loan 100 Index. It charges a 0.65% expense ratio and currently pays a 7.6% 30-day SEC yield with monthly distributions.
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9 of the Best Bond ETFs to Buy for 2025 originally appeared on usnews.com
Update 05/02/25: This story was previously published at an earlier date and has been updated with new information.
