Investing in bonds helps reduce the risk of volatile stock markets and provides long-term returns. In a well-balanced portfolio, U.S. bonds act as a stabilizing force, alongside cash. However, directly purchasing and managing individual bonds can be complex and time-consuming for retail investors. A convenient alternative is investing in bond ETFs, which offer easy access to diversified bond portfolios.
1. U.S. Short-Term Bond ETF (SHY)
SHY is a short-term U.S. Treasury bond ETF that invests in 1-3 year maturity U.S. government bonds. Managed by BlackRock, it is formally named iShares 1-3 Year Treasury Bond ETF. SHY has a 0.15% expense ratio and was launched in July 2002.
- Ticker: SHY
- Name: iShares 1-3 Year Treasury Bond ETF
2. U.S. Intermediate-Term Bond ETF (IEF)
IEF invests in 7-10 year maturity U.S. Treasury bonds. Like SHY, it is also managed by BlackRock under the name iShares 7-10 Year Treasury Bond ETF. It has a 0.15% expense ratio and was launched in July 2002.
- Ticker: IEF
- Name: iShares 7-10 Year Treasury Bond ETF
3. U.S. Long-Term Bond ETFs (TLT, EDV)
For long-term U.S. Treasury bonds (maturities over 20 years), investors have options like TLT and EDV.
- TLT is managed by BlackRock and has a 0.15% expense ratio. It was launched in July 2002, like SHY and IEF.
- Ticker: TLT
- Name: iShares 20+ Year Treasury Bond ETF
- EDV is managed by Vanguard and offers a lower expense ratio of 0.07%. It was launched in December 2007.
- Ticker: EDV
- Name: Vanguard Extended Duration Treasury ETF
Comparison Table of U.S. Treasury Bond ETFs
| Maturity | Ticker | ETF Name | Price (USD) | Duration | Expense Ratio |
|---|---|---|---|---|---|
| Short-Term | SHY | iShares 1-3 Year Treasury Bond ETF | $82.18 | 1.87 | 0.15% |
| VGSH | Vanguard Short-Term Treasury Index ETF | $58.53 | 1.90 | 0.04% | |
| SPTS | SPDR Portfolio Short Term Treasury ETF | $29.21 | 1.07 | 0.06% | |
| Intermediate-Term | IEI | iShares 3-7 Year Treasury Bond ETF | $118.18 | 4.49 | 0.15% |
| IEF | iShares 7-10 Year Treasury Bond ETF | $99.73 | 7.77 | 0.15% | |
| VGIT | Vanguard Intermediate-Term Treasury Index ETF | $60.27 | 5.20 | 0.04% | |
| SPTI | SPDR Portfolio Intermediate Term Treasury ETF | $29.08 | 5.13 | 0.06% | |
| Long-Term | TLT | iShares 20+ Year Treasury Bond ETF | $106.46 | 17.85 | 0.15% |
| VGLT | Vanguard Long-Term Treasury Index ETF | $65.68 | 15.90 | 0.04% | |
| SPTL | SPDR Portfolio Long Term Treasury ETF | $30.94 | 16.44 | 0.06% |
These bond ETFs provide diversified exposure to U.S. Treasury bonds, making them ideal for hedging against recessions and maintaining portfolio stability.
