After a brief reprieve following April’s tariff rollout, uncertainty has returned to the U.S. stock market. The volatility began on July 30, after a week of earnings reports from major U.S. companies and a much-anticipated Federal Reserve decision.
The Federal Open Market Committee left the federal funds target range unchanged at 4.25% to 4.5%, with no hike or cut. What stood out was a rare dissent from Fed governors Christopher Waller and Michelle Bowman, both of whom pushed for rate cuts.
Fueling the tension, President Donald Trump also publicly criticized Fed Chair Jerome Powell on social media, dubbing him “Too Late” and calling him a “total loser” for refusing to lower rates.
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Markets slid the following day after a disappointing U.S. jobs report. The Bureau of Labor Statistics (BLS) revealed that July hiring slowed more than expected, with downward revisions to May and June figures. In response, Trump dismissed BLS Director Erika McEntarfer.
With stock market volatility back in focus and equity valuations still elevated, many investors are looking for refuge. Bonds, while more turbulent than usual since the 2022 inflation shock and rate hikes, still offer a more defensive alternative.
“With yields still elevated, volatility lingering and central banks exercising caution, we believe bonds will continue to drive portfolio returns,” says JoAnne Bianco, partner and senior investment strategist at BondBloxx.
Bonds can play a key role in capital preservation and income generation, especially when accessed through exchange-traded funds (ETFs). Bond ETFs combine those time-tested benefits with added features like intraday liquidity, transparent holdings and regular monthly distributions.
Here’s a look at nine of the best bond ETFs to buy for 2025:
| ETF | Expense ratio | 30-day SEC yield |
| Vanguard Total Treasury ETF (ticker: VTG) | 0.03% | 4.2% |
| Vanguard Ultra-Short Bond ETF (VUSB) | 0.10% | 4.6% |
| iShares MBS ETF (MBB) | 0.04% | 4.3% |
| SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) | 0.14% | 4.2% |
| Schwab Intermediate-Term U.S. Treasury ETF (SCHR) | 0.03% | 4.0% |
| Schwab Long-Term U.S. Treasury ETF (SCHQ) | 0.03% | 4.9% |
| Xtrackers USD High Yield Corporate Bond ETF (HYLB) | 0.05% | 7.2% |
| BondBloxx IR&M Tax-Aware Short Duration ETF (TAXX) | 0.35% | 3.5% |
| BondBloxx Private Credit CLO ETF (PCMM) | 0.68% | 7.5% |
Vanguard Total Treasury ETF (VTG)
“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.”
Vanguard launched VTG in early July to meet investor demand for an inexpensive total Treasury solution. This ETF tracks the Bloomberg U.S. Treasury Total Return Unhedged USD Index for a 0.03% expense ratio. Investors can currently expect a 4.2% 30-day SEC yield that is generally exempt from state taxes.
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 one of Vanguard’s most popular active bond ETFs, with over $5.4 billion in assets. This ETF does not track an index. Instead, VUSB’s portfolio managers select a portfolio of money market instruments and short-term, high-quality bonds. The result is a 4.6% 30-day SEC yield for a 0.1% expense ratio.
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 access these bonds via MBB.
MBB provides real estate-linked cash flows, but with less volatility than real estate investment trusts. It currently holds over 11,300 MBS issued by Ginnie Mae, Fannie Mae and Freddie Mac, which carry a government guarantee. The ETF charges a low 0.04% expense ratio and pays a 4.3% 30-day SEC yield.
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 on the market are Treasurys with less than a year remaining until maturity, called Treasury bills. Investors can purchase them individually on TreasuryDirect.gov, or outsource to an ETF like BIL. BIL charges a 0.1356% expense ratio and currently pays a 4.2% 30-day SEC yield.
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.”
SCHR provides exposure to intermediate Treasurys by tracking the Bloomberg US Treasury 3-10 Year Index. This ETF can be used as an alternative to aggregate bond funds for investors prioritizing credit quality. It charges a 0.03% expense ratio and pays a 4% 30-day SEC yield.
[READ: 5 Great Fixed-Income Funds to Buy for 2025]
Schwab Long-Term U.S. Treasury ETF (SCHQ)
“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.”
SCHQ bucks the convention of bonds being less volatile than stocks. It tracks the Bloomberg US Long Treasury Index, with bonds in this benchmark having an average maturity of 22 years. Should interest rates fall, SCHQ could see strong upside price appreciation. The ETF pays a 4.9% 30-day SEC yield.
Xtrackers USD High Yield Corporate Bond ETF (HYLB)
Investors who don’t mind moving down the credit risk spectrum in search of higher yields may like HYLB. This ETF tracks the Solactive USD High Yield Corporates Total Market Index. The bonds in HYLB have greater credit risk, as they are non-investment-grade, but the ETF pays a higher 7% 30-day SEC yield.
“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,” says Ben Spalding, head of fixed-income portfolio management, Xtrackers Americas, at DWS Group. HYLB charges a 0.05% expense ratio.
BondBloxx IR&M Tax-Aware Short Duration ETF (TAXX)
“When building a fixed-income portfolio, it’s important to consider not just what you earn, but what you keep after taxes,” Bianco explains. “Our actively managed ETF TAXX offers a more precise way to maximize after-tax income.” With a 0.35% expense ratio, TAXX is attractively priced for an active fund.
TAXX invests in a blend of both municipal and taxable bonds, all screened for shorter maturities and higher credit quality to minimize interest rate and default risk. The ETF currently pays a 3.5% 30-day SEC yield, which BondBloxx estimates to be around 5.4% on a tax-equivalent basis.
BondBloxx Private Credit CLO ETF (PCMM)
“PCMM continues to be one of our top picks for 2025 because we like private credit’s potential for yield and total return, all with the low volatility it provides,” says Tony Kelly, co-founder of BondBloxx. “We launched the fund in response to consistent requests from our clients for exposure to private credit.”
PCMM provides exposure to a portfolio of loans to privately held U.S. middle-market companies. This is achieved by allocations to collateralized loan obligations, which own pools of private loans separated by tranches based on risk and seniority. PCMM pays a 7.5% 30-day SEC yield.
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9 of the Best Bond ETFs to Buy for 2025 originally appeared on usnews.com
Update 08/04/25: This story was previously published at an earlier date and has been updated with new information.
