After months of pressure from President Donald Trump to cut interest rates, Federal Reserve Chair Jerome Powell finally appears to have bent the knee.
Speaking in Jackson Hole, Wyoming, on Aug. 22, Powell acknowledged that while inflation has moderated, risks to employment have also increased. As a result, markets immediately priced in a higher probability that the Fed will deliver a 25-basis-point, or quarter-point, cut at its Sept. 16-17 policy meeting.
The pivot is particularly welcome news for bond bulls who are still recovering from the bruising 2022 bear market, when the Fed raised rates at an unprecedented pace. That tightening cycle caused unusually steep losses for bond exchange-traded funds, or ETFs.
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Bond prices move inversely to interest rates, and the magnitude of those price swings depends on the portfolio’s duration, or its sensitivity to changes in rates. For example, longer-duration bond funds tend to rally more when rates fall, while shorter-duration funds see less impact.
With a prospective rate cut now looming, investors have several bond ETF options to position for upside capture or higher income. “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.
Here’s a look at nine of the best bond ETFs to buy for 2025:
| ETF | Expense Ratio | 30-Day SEC Yield |
| Vanguard Total Corporate Bond ETF (ticker: VTC) | 0.03% | 4.9% |
| Vanguard Ultra-Short Bond ETF (VUSB) | 0.10% | 4.4% |
| DoubleLine Commercial Real Estate ETF (DCRE) | 0.40% | 5.4% |
| iShares iBoxx $ High Yield Corporate Bond ETF (HYG) | 0.49% | 6.4% |
| Xtrackers USD High Yield Corporate Bond ETF (HYLB) | 0.05% | 6.9% |
| BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC) | 0.40% | 10.7% |
| SPDR Portfolio Intermediate Term Corporate Bond ETF (SPIB) | 0.04% | 4.6% |
| SPDR Portfolio Long Term Corporate Bond ETF (SPLB) | 0.04% | 5.8% |
| BondBloxx Private Credit CLO ETF (PCMM) | 0.68% | 7.3% |
Vanguard Total Corporate Bond ETF (VTC)
“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.”
VTC is highly diversified, holding more than 3,700 investment-grade corporate bonds represented by the Bloomberg U.S. Corporate Bond Index. It has intermediate interest rate sensitivity with an average duration of 6.7 years and currently pays a 4.9% 30-day SEC yield. The ETF charges a 0.03% expense ratio.
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’s actively managed portfolio of high-quality, short-duration bonds helps the ETF deliver minimal price volatility and a competitive 4.4% 30-day SEC yield. However, this yield may fall in September if the Fed elects to cut rates. But until then, investors can use VUSB as a liquid money market fund alternative.
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 is a unique option in this segment.
This ETF holds commercial MBS, which are backed with income-producing properties like offices, hotels and retail spaces. DCRE owns both agency and non-agency MBS, with the former carrying government guarantees and the latter offering higher yields but more risk. The ETF pays a 5.4% 30-day SEC yield.
iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
“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.”
This mechanic is why some bond ETFs like HYG use an index that explicitly screens for liquidity. By replicating the Markit iBoxx USD Liquid High Yield Index, HYG trades with a low 0.01% bid-ask spread and also offers weekly options. It pays a 6.4% 30-day SEC yield and charges a 0.49% expense ratio.
Xtrackers USD High Yield Corporate Bond ETF (HYLB)
HYG is a popular high-yield bond ETF, but it is by no means the cheapest. If you prefer to buy and hold high-yield bonds for income instead of trading them actively, HYLB might be a better pick. This ETF charges a 0.05% expense ratio, which is highly competitive for junk bond funds.
“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 for Xtrackers Americas at DWS Group. HYLB currently pays a 6.9% 30-day SEC yield.
[READ: 7 Best Long-Term ETFs to Buy and Hold]
BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC)
Non-investment-grade bonds are those rated below BBB-, with BB and B being the most common in high-yield ETFs like HYG. For investors seeking maximum income at the cost of elevated risk, XCCC fits the bill. It tracks the ICE CCC US Cash Pay High Yield Constrained Index, which owns distressed issues.
Investors are compensated for the credit risk XCCC poses with a very high 10.7% 30-day SEC yield. To limit concentration risk, the ETF caps exposure to any single issuer at 2%. However, investors should expect XCCC to be more volatile than investment-grade bond ETFs. It charges a 0.4% expense ratio.
SPDR Portfolio Intermediate Term Corporate Bond ETF (SPIB)
“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.”
State Street’s SPDR line of funds includes a series of low-cost “Portfolio ETFs” that break equity and fixed-income markets into categories by sector, maturity and credit quality. For intermediate-duration corporate exposure, SPIB is the ETF to use. It delivers a 4.6% 30-day SEC yield at a competitive 0.04% expense ratio.
SPDR Portfolio Long Term Corporate Bond ETF (SPLB)
“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.”
The next step up from SPIB is SPLB. This ETF only holds investment-grade corporate bonds with maturities of 10 years or more. That translates to a high rate sensitivity with an average duration of 12.7 years. The ETF currently pays a 5.8% 30-day SEC yield and charges the same 0.04% expense ratio as SPIB.
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.”
Unlike most private credit funds, PCMM trades with intra-day liquidity thanks to its use of the ETF structure. However, its 7.3% 30-day SEC yield still rivals what private credit can produce. This is thanks to the ETF’s use of collateralized loan obligations (CLOs), backed by pools of mid-market private loans.
[Read: 6 of the Best AI ETFs to Buy for 2025]
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9 of the Best Bond ETFs to Buy for 2025 originally appeared on usnews.com
Update 09/04/25: This story was previously published at an earlier date and has been updated with new information.
