9 Best Bond ETFs to Buy in 2025 for Income and Stability

Introduction:

In the world of investing, stocks tend to grab all the attention — but bonds are just as important, especially when you’re looking to reduce risk and generate steady income. One of the easiest ways to invest in bonds today is through bond ETFs. These funds offer access to different types of bonds, from U.S. Treasury bills to high-yield corporate debt, all wrapped into a single, easy-to-trade package.

When iShares introduced the first U.S.-listed bond ETFs back in 2002, the lineup was small. Just four funds — including LQD, SHY, IEF, and TLT — gave investors a new way to buy into bonds without the hassles of traditional bond investing. Before that, most people had to deal with bond mutual funds or buy individual bonds, which came with higher costs and less flexibility. Today, bond ETFs have become a huge part of the investing world, with options for every risk level and financial goal.

 Summary

1. Vanguard Total Bond Market ETF (BND)
2. Vanguard Core-Plus Bond ETF (VPLS)
3. Vanguard Mortgage-Backed Securities ETF (VMBS)
4. iShares 0-3 Month Treasury Bond ETF (SGOV)
5. iShares 7-10 Year Treasury Bond ETF (IEF)
6. iShares 20+ Year Treasury Bond ETF (TLT)
7. High Yield Corporate Bond ETF (HYLB) Xtrackers USD
8. iShares 20+ Year Treasury Bond ETF (TLT)
9. Xtrackers High Beta High Yield Bond ETF (HYUP)

1. Vanguard Total Bond Market ETF (BND)

If you're looking for one bond ETF to give you broad, reliable coverage of the U.S. bond market, BND is a strong choice. It’s the largest bond ETF in the U.S., with over $127 billion in assets. BND includes thousands of bonds — over 11,000 to be exact — including U.S. Treasurys, mortgage-backed securities, and investment-grade corporate bonds.

Its main appeal is its simplicity and cost. The fund only charges a 0.03% expense ratio, meaning you keep more of your returns. It’s a good long-term holding for conservative investors or those who want a steady income stream with less risk than stocks.

2. Vanguard Core-Plus Bond ETF (VPLS)

While BND sticks to a passive strategy, tracking the overall bond market, VPLS takes a more hands-on approach. This ETF is actively managed, meaning a team of professionals selects the bonds it holds. It can react to changes in the market with greater flexibility as a result.

VPLS invests in a mix of government and corporate bonds, but it also includes some lower-rated debt, giving it the potential to earn more income than traditional bond index funds. Its 0.20% expense ratio is still relatively low for an active fund, and for many investors, the Chance to outperform basic bond indexes is worth the extra cost.

This ETF is well-suited for investors who want more return potential from their bond holdings without taking on extreme risk.

3. Vanguard Mortgage-Backed Securities ETF (VMBS)

Mortgage-backed securities (MBS) are bonds made up of bundles of home loans, and VMBS gives you access to this part of the market. Usually, government-backed companies like Fannie Mae, Freddie Mac, and Ginnie Mae issue or guarantee these bonds.

With a current yield of about 4.2% and a low expense ratio of 0.03%, VMBS is an excellent bond ETF. That makes it attractive to income-focused investors. The ETF also pays monthly, which can be appealing to retirees or those looking for regular cash flow.

Because these securities are backed by home loans, VMBS adds a layer of diversification beyond Treasurys and corporate debt. It’s a great choice for someone looking to boost income while still Staying relatively safe.

4. iShares 0-3 Month Treasury Bond ETF (SGOV)

If safety and liquidity are your top priorities, SGOV is one of the best options available. This ETF holds ultra-short-term U.S. Treasury securities with shorter than three-month maturities. The bonds have almost no credit or interest rate risk because of their short maturity and government backing.

SGOV is a favorite for investors who want a place to park their cash while still earning some yield. In fact, its current 30-day SEC yield is around 4.2%, which is far better than what you'd get in most savings accounts. It also has extremely low trading costs and a tight bid-ask spread, meaning it’s easy to buy and sell without losing money on pricing.

This ETF is ideal for conservative investors or those who want quick access to their money while earning a bit of interest.

5. iShares 7-10 Year Treasury Bond ETF (IEF)

Investors who want to stay in safe government bonds but are looking for higher income than what short-term Treasurys offer should take a look at IEF. This ETF holds U.S. Treasury bonds with maturities between 7 and 10 years, which makes it a good middle-ground between low-risk short-term and volatile long-term bonds.

With a yield of around 4.1% and a 0.15% expense ratio, IEF offers a mix of income and stability. It’s less sensitive to interest rate changes than long-term bond funds, but it still provides enough yield to help balance out a stock-heavy portfolio.

IEF works well for investors with a medium-term time horizon, typically 3–10 years, or those who are preparing for future spending needs.

6. iShares 20+ Year Treasury Bond ETF (TLT)

For investors willing to take on more risk in pursuit of bigger returns, TLT is one of the most interesting bond ETFs. It holds U.S. Treasury bonds with maturities over 20 years, which makes it highly sensitive to interest rate movements.

That sensitivity cuts both ways. TLT often does quite well as interest rates decline. For example, during the 2020 pandemic, TLT gained nearly 18%. But when rates rise sharply, the ETF can lose a lot of value — it dropped over 31% in 2022.

Because of this boom-or-bust nature, TLT is best used as a strategic investment — not necessarily a long-term core holding. It’s ideal for investors with a strong view on interest rates or those looking to hedge stock market risks during economic downturns.Find fundamentally strong stock picks to grow your portfolio at StockXpo. 

7. High Yield Corporate Bond ETF (HYLB) Xtrackers USD

HYLB gives investors access to high-yield — also known as “junk” — corporate bonds. These are bonds issued by companies with lower credit ratings, which means they pay higher interest to compensate for the added risk.

The allure of HYLB lies in its high yield (about 7.2%) and surprisingly low expenditure ratio (just 0.05%). It also focuses on liquid bonds, meaning the underlying securities are large and actively traded, which helps reduce volatility.

While HYLB isn’t suitable for risk-averse investors, it can be a great addition to a diversified portfolio for those looking to increase income. Just keep in mind that these bonds are more likely to default in a recession or economic downturn.

8. BondBloxx BBB Corporate Bond ETF with a 1–5 Year Rating (BBBS)

BBBS focuses on corporate bonds that are rated BBB — the lowest tier of investment-grade credit — and have short maturities of 1 to 5 years. These types of bonds often provide a “sweet spot” for investors: better yields than top-rated bonds, but less risk than junk bonds.

The ETF currently yields about 4.7%, and because it holds short-term debt, it’s less exposed to rising interest rates. Many investors appreciate that balance of modest income with manageable risk.

BBBS is a solid choice for someone who wants more yield than government bonds but still values safety and doesn’t want long-term exposure.

9. BondBloxx Private Credit CLO ETF (PCMM)

Finally, for investors who are open to more advanced strategies, PCMM provides access to private credit through Collateralized Loan Obligations (CLOs). These are bundles of loans made to private companies, and they typically offer high yields due to their higher credit risk.

PCMM pays a very attractive yield of around 7.6%, but it comes with a higher expense ratio of 0.68% and more complexity than traditional bond ETFs. Still, for those who want to diversify beyond public markets and can handle some risk, it’s a compelling option.

It’s especially suited to experienced investors who are looking for income and total return potential beyond traditional fixed-income funds.

Frequently Asked Questions

Q.1: Are bond ETFs safer than stock ETFs?
A.1: Yes, generally. Bond ETFs are considered less volatile than stock ETFs, but their risk varies depending on the type of bonds they hold.

Q.2: Do bond ETFs pay monthly income?
A.2:Many bond ETFs — especially those focused on government or mortgage-backed securities — pay monthly interest, making them attractive to income-focused investors.

Q.3: Can I lose money in bond ETFs?
A.3: Yes. While typically less risky than stocks, bond ETFs can lose value due to rising interest rates, credit defaults, or economic downturns.

Q.4: What's the difference between a passive and an active bond ETF?
A.4: Passive bond ETFs track a bond index, while active ETFs are managed by professionals who adjust holdings based on market outlooks.

Q.5: Which bond ETF is best for rising interest rates?
A.5: Short-term bond ETFs like SGOV or BBBS are generally less sensitive to interest rate changes and may perform better in rising-rate environments.

Conclusion

Whether you're seeking income, safety, or diversification, bond ETFs offer a simple and efficient way to gain exposure to the fixed-income market. From ultra-safe government bonds to high-yield corporate debt, there’s a bond ETF for every risk tolerance and investment goal.

The key is to match the bond ETF to your financial needs and risk appetite. Conservative investors may lean toward BND, SGOV, or IEF, while those seeking higher returns might explore HYLB or PCMM. A diversified portfolio that includes bond ETFs can reduce volatility, provide income, and help you weather market storms more effectively.

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