Fixed income securities have held up better than the stock market, bolstering the argument for diversifying your portfolio. The Vanguard Total Bond Market ETF
The Vanguard Total Bond fund is a behemoth with nearly $65 billion in assets, and that size alone provides some measure of safety. That bulk also allows the fund to spread its assets across more than 2,900 securities, including bonds ranging from Apache
Year-to-Date Return: (1.0%)
Expense Ratio: 0.11%
Assets: $64.9 billion
Fund prospects and risks
Pain is a relative concept, and while many parts of the globe have suffered steep drops in market prices, the U.S. has not plummeted quite as far. Being the current safe haven has helped to stanch the pain somewhat in domestic markets, and the breadth and depth of the U.S. economy is comforting when compared to other alternatives.
Yet, all good things come to an end, and at some point, the federal government’s recent activities are likely to lead to higher inflation -- which could pressure bond values. Another negative influence is the likelihood that capital flows will slow or reverse when the halo of safety is no longer the preeminent criteria for investors.
Investors who want the ease of trading provided by a stock but the security of fixed-income investments have a number of ETFs to select from. The Vanguard Total Bond fund is one of the least expensive options and is suitable for investors with a medium-term time horizon. The fund has been stress-tested by the recent market gyrations and has passed with distinction, posting some of the best performance numbers of its class.
Fool contributor Zoe Van Schyndel now lives in the Seattle area, where she enjoys the coffee and natural wonders. She does not own any of the funds or securities mentioned in this article. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.