Fixed Income ETFs

Fixed Income ETFs are traded on the major stock exchanges and allow investors to expose themselves to the bond markets.  Similar to the way that the S&P 500 is mirrored by the SPY ETF, these fixed income ETFs track the performance of the bond index that it is tracking.  You will be able to find a variety of bond market indices out there that track bond performance in a variety of ways.  Some bond indices will focus on a specific sector such as government treasury bonds, while other will focus on bonds with a credit rating of AAA or bonds which have a term to maturity of greater than 10 years, etc.

Since they have been released, short term investors have flocked to fixed income ETFs in an effort to obtain higher yields than would be received by simply leaving their money in low yielding money market funds, for even a day or two.  Additionally, many investors enjoy the option to buy and sell these ETFs intraday as compared to bond mutual funds which only allow you to buy or sell on a closing basis.

Being that fixed income ETFs are composed of bonds, they are subject to shift in prices for the same reason that you would expect bonds to shift higher or lower.  Interest rate volatility, yield curve shifts, and changes in yield spreads between US Treasury bonds and other bonds with similar terms.

Where can I do research on Fixed Income ETFs?


If you want to find a fixed income bond etf, etfconnect is a great resource to find what your looking for.

Use the following link and you will find an expansive list of ETF offerings:

http://www.etfconnect.com/select/FindAFund.aspx

Tim Ord
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