Gone are the days when bond exchange-traded funds (ETFs) were limited to plain-vanilla options meant to quietly support a low-risk component of a diversified portfolio.
While bond ETFs still play that traditional role, as seen in the continued popularity of the “60-40” portfolio, with 60% in stocks and 40% in bonds, their use cases have expanded.
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For instance, investors looking for higher income can target ETFs that hold non-investment-grade, or “junk” bonds. While the risk of default is higher, they come with a greater return potential.
This segment of the bond market offers above-average yields, and the ETF structure spreads out the risk of individual defaults across a broad portfolio.
Others may be betting on falling interest rates. Duration measures a bond’s price sensitivity to changes in interest rates, so the longer the duration, the more you stand to gain (or lose) when rates move.
In particular, long-duration bond ETFs, which are those holding bonds with longer maturities, can rise significantly in value if rates fall, as they did during the COVID-19 crash in March 2020.
Finally, many new bond ETFs are now actively managed. Instead of tracking an index, they rely on a dedicated team to select securities based on research and market outlook.
Yet unlike traditional active mutual funds, a growing number of active bond ETFs often come at a fraction of the cost — some as low as 0.08%, putting them in line with passive options.
Here’s a look at nine of the best bond ETFs to buy for 2025:
| ETF | Expense ratio | 30-day SEC yield |
| Vanguard Total Bond Market ETF (ticker: BND) | 0.03% | 4.4% |
| Vanguard Ultra-Short Bond ETF (VUSB) | 0.10% | 4.7% |
| iShares MBS ETF (MBB) | 0.04% | 4.2% |
| SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) | 0.1356% | 4.1% |
| Schwab Intermediate-Term U.S. Treasury ETF (SCHR) | 0.03% | 4.1% |
| iShares 20+ Year Treasury Bond ETF (TLT) | 0.15% | 4.9% |
| BondBloxx BBB Rated 1-5 Year Corporate Bond ETF (BBBS) | 0.19% | 4.8% |
| Xtrackers USD High Yield Corporate Bond ETF (HYLB) | 0.05% | 7.5% |
| BondBloxx Private Credit CLO ETF (PCMM) | 0.68% | 7.4% |
Vanguard Total Bond Market ETF (BND)
“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.”
BND is Vanguard’s flagship bond ETF, with more than $126 billion in assets under management. It is highly diversified, holding more than 11,300 Treasurys, mortgage-backed securities (MBS) and investment-grade corporate bonds. BND currently pays a 4.4% 30-day SEC yield and charges a minimal 0.03% expense ratio, or $3 per year for every $10,000 invested.
Vanguard Ultra-Short Bond ETF (VUSB)
“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.
VUSB is actively managed for a low 0.1% expense ratio. The ETF prioritizes high-quality bonds with maturities ranging from zero to two years, which minimizes both credit and interest rate risk. However, its price can fluctuate, so it’s not a money market fund equivalent. VUSB pays a 4.7% 30-day SEC yield.
iShares MBS ETF (MBB)
“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. Investors can gain exposure via ETFs like MBB.
MBB tracks the Bloomberg U.S. MBS Index, which spans more than 11,300 MBS issued by three government-sponsored entities: Ginnie Mae, Fannie Mae and Freddie Mac. The ETF charges a low 0.04% net expense ratio and currently pays a 4.2% 30-day SEC yield, just slightly lower than BND.
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL)
“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 Treasury bills, or T-bills. These are high-quality, short-maturity government-issued securities. When packaged into an ETF like BIL, investors benefit from very good liquidity as evidenced by a minimal 0.01% 30-day median bid-ask spread. BIL pays a 4.1% 30-day SEC yield.
[SEE: 7 Best Monthly Dividend Stocks to Buy Now.]
Schwab Intermediate-Term U.S. Treasury ETF (SCHR)
“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.”
Exposure to the belly of the yield curve can be obtained by investing in SCHR, which tracks the Bloomberg US Treasury 3-10 Year Index. SCHR is as cheap as BND with a low 0.03% expense ratio, but features higher safety from a credit risk perspective. However, it pays a lower 4.1% 30-day SEC yield.
iShares 20+ Year Treasury Bond ETF (TLT)
“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.”
TLT tracks the ICE US Treasury 20+ Year Bond Index. When interest rates rose in 2022, this ETF suffered a 32.4% loss that year. However, its high volatility makes it a potent diversifier in portfolios as long as bonds have a low correlation to stocks. Investors can also sell covered calls on TLT to earn high income.
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. This ETF exclusively targets BBB-rated corporate bonds.
Compared to A and AA-rated corporate bonds, BBB bonds have greater credit risk, but pay higher yields. “BBB-rated corporate bonds are persistent outperformers within the U.S. investment-grade universe, driven by their historically higher average coupon income,” Bianco explains.
Xtrackers USD High Yield Corporate Bond ETF (HYLB)
“HYLB offers broad exposure to the U.S. high-yield corporate bond market,” says Ben Spalding, senior fixed-income portfolio manager at DWS Group. “HYLB also has a shorter duration than most peers and offers superior liquidity, as bonds in the portfolio must have a minimum $400 million float.”
This bond ETF currently tracks the Solactive USD High Yield Corporates Total Market Index and holds over $3.7 billion in AUM. Notably, it is also one of the most affordable high-yield bond ETFs with a very low 0.05% expense ratio. HYLB currently pays a 7.5% 30-day SEC yield, with monthly distributions.
BondBloxx Private Credit CLO ETF (PCMM)
Bond ETFs have evolved to the point where even institutional-level assets like private credit are now available. A newer example is PCMM, which holds collateralized loan obligations (CLOs) as a private credit proxy. The ETF currently delivers a high 7.4% 30-day SEC yield and charges a 0.68% expense ratio.
“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.”
[READ: 7 Best Long-Term ETFs to Buy and Hold]
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9 of the Best Bond ETFs to Buy for 2025 originally appeared on usnews.com
