This article was updated on March 6, 2018, and was originally published on June 24, 2017.

Bonds should be a part of any well-rounded investment portfolio, no matter how old you are or how aggressive your strategy. However, choosing individual bonds can be tricky, and many bonds don't have the liquidity that investors typically want.

For most investors, an exchange-traded fund, or ETF, that invests in bonds is the smartest way to go. There are hundreds of bond ETFs with various investment objectives, yields, and maturity terms. With that in mind, here are five low-cost bond ETFs from Schwab and Vanguard that could be smart additions to your portfolio, and a bit of information about each one.

Fund Name

Expense Ratio

Yield

5-Year Average Total Return

Schwab U.S. Aggregate Bond ETF (NYSEMKT:SCHZ)

0.04%

2.50%

1.62%

Schwab Short-Term Treasury ETF (NYSEMKT:SCHO)

0.06%

1.19%

0.40%

Vanguard Long-Term Bond Index Fund ETF (NYSEMKT:BLV)

0.07%

3.86%

3.59%

Vanguard Tax-Exempt Bond Index Fund ETF (NYSEMKT:VTEB)

0.09%

2.02%

N/A

Vanguard Total International Bond Index Fund ETF (NASDAQ:BNDX)

0.11%

2.24%

N/A

Data source: TD Ameritrade. Expense ratio, dividend yield, and total return information is current as of March 6, 2018. The last two funds in the chart have not been in existence for five years, as of this writing.

Note that there are many other categories of bonds to invest in, so this is not an exhaustive list of bond ETFs that could make good additions to your portfolio. For example, in 2016, my colleague Jordan Wathen suggested bond funds that invest in inflation-protected securities, and funds that invest in bonds of a specific maturity date.

Handing over money.

Bond funds can provide income, without too much volatility. Image source: Getty Images.

Schwab U.S. Aggregate Bond ETF

The Schwab U.S. Aggregate Bond ETF, with an expense ratio of just 0.04%, is the cheapest major bond ETF on the market. The fund tracks the Bloomberg Barclays U.S. Aggregate Bond Index, which is a broad index of U.S. investment-grade taxable bonds, including U.S. Treasuries, government bonds, corporate bonds, and mortgage-backed securities. In a nutshell, this is a highly diversified bond ETF with broad exposure to many different bond durations and types.

Schwab Short-Term Treasury ETF

The Schwab Short-Term Treasury ETF, as the name implies, invests in short-term Treasury securities. Specifically, the fund tracks the Bloomberg Barclays U.S. 1-3 Year Treasury Bond Index. Short-term Treasuries have lower yields than longer-dated bonds, but have very little interest rate and default risk. Essentially, this is a very low-risk, low-volatility bond fund that's a step above a savings account yield-wise, and can be appropriate for older investors and those for whom capital preservation is a top priority.

Vanguard Long-Term Bond Index Fund ETF

Toward the opposite end of the risk-reward spectrum is the Vanguard Long-Term Bond Index Fund ETF. The fund tracks the Bloomberg Barclays U.S. Long Government/Credit Float Adjusted Index. Basically, the fund invests in investment-grade government and corporate bonds with maturities greater than 10 years. Although these types of bonds produce higher yields, they are also more volatile in price, and can lose significant market value if interest rates rise. Therefore, this fund is appropriate for investors with a relatively long investment time horizon.

Vanguard Tax-Exempt Bond Index Fund ETF

Investors who have money that isn't in tax-advantaged accounts such as IRAs may want to consider the Vanguard Tax-Exempt Bond Index Fund ETF, which tracks the Standard & Poor's National AMT-Free Municipal Bond Index. All of the bonds in this index are exempt from federal income taxes and the alternative minimum tax. Although the fund's roughly 2% yield may not sound too impressive, if you're in the 25% tax bracket, this is the equivalent of a 2.67% taxable yield.

Vanguard Total International Bond Index Fund ETF

As a hedge against currency fluctuations, it may be wise to allocate some of your bond investments to non-U.S.-dollar-denominated securities, as the Vanguard Total International Bond Index Fund ETF does. The fund tracks the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index, and essentially invests in investment-grade bonds denominated in currencies other than the U.S. dollar. To illustrate the types of bonds the fund owns, top holdings include government debt issued by Japan, the U.K., and France.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.