the Best Bond ETFs for 2025
the Best Bond ETFs for 2025
Some of the largest bond exchange-traded funds, or ETFs, by assets under management (AUM) track a well-known benchmark: the Bloomberg U.S. Aggregate Bond Index, commonly called "the Agg."
The Agg includes over 10,000 U.S.-issued fixed income securities, ranging from Treasury bonds and mortgage-backed securities (MBS) to investment-grade corporate debt. These holdings span short-term bonds with less than a year to maturity to long-term debt stretching beyond 20 years.
You may already own one of the most popular ETFs in this category: the iShares Core U.S. Aggregate Bond ETF (ticker: AGG) or the Vanguard Total Bond Market ETF (BND).
With around $125 billion and $127 billion in assets, respectively, these two low-cost, diversified funds are common in "couch potato" portfolios that aim for long-term simplicity and minimal fees.
But bond ETFs don't stop at the Agg. While it remains the default "one-size-fits-all" option for many, fixed-income investors today can choose from more specialized tools to tailor their risk and return.
For example, funds that invest in emerging-market bonds can offer higher yields in exchange for greater political and currency risk. Many emerging-market bond ETFs hedge for currency fluctuations, too, so investors don't need to worry about foreign exchange risk.
If you're worried about rising interest rates and don't mind dipping into lower credit quality, senior loan ETFs may be worth a look. These funds invest in floating-rate loans issued to companies with below-investment-grade credit. Because they're typically secured by a borrower's assets and rank higher in the capital structure, they may offer some protection in the event of default.
And finally, some of the newer entrants in the bond ETF world offer exposure to private credit – a once-exclusive asset class – through publicly traded vehicles like business development companies (BDCs) or collateralized loan obligations (CLOs). These tools aim to tap into yield-rich corners of the debt market that were once only accessible to institutions or high-net-worth investors.
With more than 800 U.S.-listed bond ETFs available – and new ones launching regularly – there's almost certainly a fund out there that fits your portfolio's goals.
Here's a look at nine of the best bond ETFs to buy for 2025:
ETFExpense ratio30-day SEC yield
Vanguard Ultra-Short Treasury ETF (VGUS)0.07%4.2%
Vanguard Ultra-Short Bond ETF (VUSB)0.10%4.7%
Vanguard Mortgage-Backed Securities ETF (VMBS)0.03%4.0%
iShares 0-3 Month Treasury Bond ETF (SGOV)0.09%4.2%
iShares 7-10 Year Treasury Bond ETF (IEF)0.15%4.1%
iShares 20+ Year Treasury Bond ETF (TLT)0.15%4.6%
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%10.2%
BondBloxx Private Credit CLO ETF (PCMM)0.68%7.2%
The Agg includes over 10,000 U.S.-issued fixed income securities, ranging from Treasury bonds and mortgage-backed securities (MBS) to investment-grade corporate debt. These holdings span short-term bonds with less than a year to maturity to long-term debt stretching beyond 20 years.
You may already own one of the most popular ETFs in this category: the iShares Core U.S. Aggregate Bond ETF (ticker: AGG) or the Vanguard Total Bond Market ETF (BND).
With around $125 billion and $127 billion in assets, respectively, these two low-cost, diversified funds are common in "couch potato" portfolios that aim for long-term simplicity and minimal fees.
But bond ETFs don't stop at the Agg. While it remains the default "one-size-fits-all" option for many, fixed-income investors today can choose from more specialized tools to tailor their risk and return.
For example, funds that invest in emerging-market bonds can offer higher yields in exchange for greater political and currency risk. Many emerging-market bond ETFs hedge for currency fluctuations, too, so investors don't need to worry about foreign exchange risk.
If you're worried about rising interest rates and don't mind dipping into lower credit quality, senior loan ETFs may be worth a look. These funds invest in floating-rate loans issued to companies with below-investment-grade credit. Because they're typically secured by a borrower's assets and rank higher in the capital structure, they may offer some protection in the event of default.
And finally, some of the newer entrants in the bond ETF world offer exposure to private credit – a once-exclusive asset class – through publicly traded vehicles like business development companies (BDCs) or collateralized loan obligations (CLOs). These tools aim to tap into yield-rich corners of the debt market that were once only accessible to institutions or high-net-worth investors.
With more than 800 U.S.-listed bond ETFs available – and new ones launching regularly – there's almost certainly a fund out there that fits your portfolio's goals.
Here's a look at nine of the best bond ETFs to buy for 2025:
ETFExpense ratio30-day SEC yield
Vanguard Ultra-Short Treasury ETF (VGUS)0.07%4.2%
Vanguard Ultra-Short Bond ETF (VUSB)0.10%4.7%
Vanguard Mortgage-Backed Securities ETF (VMBS)0.03%4.0%
iShares 0-3 Month Treasury Bond ETF (SGOV)0.09%4.2%
iShares 7-10 Year Treasury Bond ETF (IEF)0.15%4.1%
iShares 20+ Year Treasury Bond ETF (TLT)0.15%4.6%
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%10.2%
BondBloxx Private Credit CLO ETF (PCMM)0.68%7.2%
- 9-of-the-Best-Bond-ETFs-to-Buy-for-2025-Investing-U-S-News-04-03-2025_11_15_AM.png (101.36 KiB) Viewed 15009 times
Re: the Best Bond ETFs for 2025
Vanguard Ultra-Short Treasury ETF (VGUS)
"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."
Investors looking to play defense may find VGUS helpful. This newer Vanguard bond ETF tracks the Bloomberg Short Treasury Index, which holds Treasurys with up to 12 months' maturity. It has low interest-rate sensitivity, with a 0.4-year duration, and pays a 4.2% 30-day SEC yield.
"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."
Investors looking to play defense may find VGUS helpful. This newer Vanguard bond ETF tracks the Bloomberg Short Treasury Index, which holds Treasurys with up to 12 months' maturity. It has low interest-rate sensitivity, with a 0.4-year duration, and pays a 4.2% 30-day SEC yield.
Re: the Best Bond ETFs for 2025
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.
Unlike VGUS, VUSB is actively managed and does not track an index. The ETF selects a portfolio of money market instruments and high-quality, short-term bonds with an average maturity of two years or less. Investors can currently expect an average duration of 1.1 year and a 4.7% 30-day SEC yield.
"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.
Unlike VGUS, VUSB is actively managed and does not track an index. The ETF selects a portfolio of money market instruments and high-quality, short-term bonds with an average maturity of two years or less. Investors can currently expect an average duration of 1.1 year and a 4.7% 30-day SEC yield.
Re: the Best Bond ETFs for 2025
Vanguard Mortgage-Backed Securities ETF (VMBS)
"Mortgage-backed securities 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. Vanguard's ETF for this segment is VMBS.
This ETF tracks a portfolio of over 1,400 agency MBS's issued by Ginnie Mae, Fannie Mae and Freddie Mac. It has an average duration of 5.1 years, implying intermediate interest-rate sensitivity. VMBS currently pays a 4% 30-day SEC yield.
"Mortgage-backed securities 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. Vanguard's ETF for this segment is VMBS.
This ETF tracks a portfolio of over 1,400 agency MBS's issued by Ginnie Mae, Fannie Mae and Freddie Mac. It has an average duration of 5.1 years, implying intermediate interest-rate sensitivity. VMBS currently pays a 4% 30-day SEC yield.
Re: the Best Bond ETFs for 2025
iShares 0-3 Month Treasury Bond ETF (SGOV)
"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 bond ETFs tend to be those that track Treasury bills (T-bills). This is why SGOV trades with a minimal 0.01% 30-day bid-ask spread. The ETF has very low interest-rate sensitivity, with an average duration of 0.1 year, and currently pays a 4.2% 30-day SEC yield.
"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 bond ETFs tend to be those that track Treasury bills (T-bills). This is why SGOV trades with a minimal 0.01% 30-day bid-ask spread. The ETF has very low interest-rate sensitivity, with an average duration of 0.1 year, and currently pays a 4.2% 30-day SEC yield.
Re: the Best Bond ETFs for 2025
iShares 7-10 Year Treasury Bond ETF (IEF)
"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."
To track this segment of the yield curve, consider IEF. This bond ETF tracks the ICE U.S. Treasury 7-10 Year Bond Index, delivering a 7.1-year average duration and a 4.1% 30-day SEC yield. It is highly liquid, with a 0.01% 30-day median bid-ask spread, and charges a reasonable 0.15% expense ratio.
"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."
To track this segment of the yield curve, consider IEF. This bond ETF tracks the ICE U.S. Treasury 7-10 Year Bond Index, delivering a 7.1-year average duration and a 4.1% 30-day SEC yield. It is highly liquid, with a 0.01% 30-day median bid-ask spread, and charges a reasonable 0.15% expense ratio.
Re: the Best Bond ETFs for 2025
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 is one of the most popular long-term Treasury bond ETFs, with over $52 billion in AUM. It is highly sensitive to changes in long-term interest rates due to a high 16-year duration. However, TLT's high volatility and options chain also make it a popular underlying asset for selling covered calls.
"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 is one of the most popular long-term Treasury bond ETFs, with over $52 billion in AUM. It is highly sensitive to changes in long-term interest rates due to a high 16-year duration. However, TLT's high volatility and options chain also make it a popular underlying asset for selling covered calls.
Re: the Best Bond ETFs for 2025
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 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. BBBS charges a 0.19% expense ratio and trades with a low 0.06% 30-day median spread.
"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 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. BBBS charges a 0.19% expense ratio and trades with a low 0.06% 30-day median spread.
Re: the Best Bond ETFs for 2025
BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC)
"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 currently pays a high 10.2% 30-day SEC yield.
"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," Bianco explains. To reduce the risk of defaults, individual bond issuers in XCCC are capped at 2%. The ETF charges a 0.4% expense ratio.
"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 currently pays a high 10.2% 30-day SEC yield.
"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," Bianco explains. To reduce the risk of defaults, individual bond issuers in XCCC are capped at 2%. The ETF charges a 0.4% expense ratio.
Re: the Best Bond ETFs for 2025
BondBloxx Private Credit CLO ETF (PCMM)
"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."
Unlike private equity interval funds or closed-end funds, PCMM trades with daily liquidity and at a market price close to its net asset value. It delivers private credit exposure via CLOs, which are composed of pools of loans to private, middle-market companies. The ETF pays a 7.2% 30-day SEC yield.
"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."
Unlike private equity interval funds or closed-end funds, PCMM trades with daily liquidity and at a market price close to its net asset value. It delivers private credit exposure via CLOs, which are composed of pools of loans to private, middle-market companies. The ETF pays a 7.2% 30-day SEC yield.