Best bond ETFs for a portfolio hold the whole investment-grade market

The cheap ETFs that hold the broad U.S. investment-grade bond market lost 0.2% to 0.3% over the year through Friday, Oct. 30. They are still the funds to use for the bond part of a portfolio.

That job is the taxable investment-grade market itself: Treasuries, mortgage bonds and company debt, held long enough that the price moves when yields move. It is not cash you may need soon, not federally tax-free income, and not a bet on long-term rates.

U.S. aggregate bond ETFs

The letter grades below are ours. A fund is graded only against others that promise the same thing, so an A on a bill fund is not a ranking against an A on an aggregate fund.

BlackRock's iShares Core U.S. Aggregate Bond ETF, AGG, tracks the Bloomberg U.S. Aggregate Bond Index and charges 0.03%. It earned an A from us. It held $139.9 billion on Oct. 30. Its total return over the year through that Friday, counting income paid out, was -0.3%.

It is not a Treasury fund. On Oct. 29, Treasuries were 46.8% of the portfolio and mortgage-backed securities were 22.8%, BlackRock reported. Company bonds made up most of what remained.

Effective duration was 5.7 years that day. A rise of 1 percentage point in yields would be expected to cut the price by about 5.7%, before the income the bonds pay.

The U.S. Treasury's 10-year par yield was 4.94% on Oct. 30. The International Monetary Fund's Global Markets Monitor that day said the 10-year had risen almost 110 basis points, or almost 1.1 percentage points, since Feb. 27.

A 30-day Securities and Exchange Commission yield is an income snapshot, not a promised return. BlackRock's was 5.03% on Oct. 29. The year's total return was the loss above.

Vanguard Total Bond Market ETF, BND, charges the same 0.03% and also earned an A from us. It tracks the Bloomberg U.S. Aggregate Float Adjusted Index, the taxable investment-grade market, and it leaves out inflation-protected and tax-exempt bonds. Vanguard reported $161.4 billion in the ETF on Sept. 30. That is the listed fund, not the larger pool that includes the mutual-fund share classes. Its total return over the year through Oct. 30 was -0.2%.

BNY Mellon Core Bond ETF, BKAG, charges nothing. Its fee table, as of Feb. 27, 2026, puts the expense ratio at 0.00%, and the fund earned an A from us. It tracks the Bloomberg U.S. Aggregate index, the same market AGG tracks. It held $1.5 billion on Oct. 30.

On $10,000, choosing BKAG over a 0.03% fund saves $3 a year. Over the 20 trading sessions through Oct. 30, AGG changed hands at about $1.1 billion a day, and BKAG at about $9.6 million. For a few thousand dollars, the thinner trading is unlikely to matter. For a large order, the fund that trades in size is the easier one to buy and sell.

The gap between those returns is a tenth of a percentage point. It is not a reason to switch.

Treasury bill ETFs

A bill fund is money you may need soon. The bonds mature within three months, so the price barely moves when longer yields move. That is a different job from the bond part of a portfolio.

On Oct. 28 the U.S. Federal Reserve left its target range at 3.75% to 4%.

BlackRock's iShares 0-3 Month Treasury Bond ETF, SGOV, earned an A from us. It held $116.8 billion on Oct. 30 and charges 0.09%. Its 30-day SEC yield was 3.79% on Oct. 29, inside that range, and 1.24 percentage points below AGG's yield the same day. The gap is the income difference between bills and a portfolio with 5.7 years of duration, mortgages and company bonds.

Over the year through Sept. 30, SGOV's total return was 3.7%.

Vanguard 0-3 Month Treasury Bill ETF, VBIL, also earned an A from us, and it charges 0.06%. Vanguard reported $12.8 billion on Sept. 30. Its SEC yield was 3.83% on Oct. 29. Its one-year return, measured at net asset value, was 3.7% as of Oct. 31.

Those trailing-year gains sit against AGG's 0.3% loss over the year through Oct. 30.

Corporate and high-yield bond ETFs

If you want more income than the aggregate fund pays, start with short company bonds.

BlackRock's iShares 1-5 Year Investment Grade Corporate Bond ETF, IGSB, earned an A from us and charges 0.04%. It held $23.8 billion on Oct. 30 and tracks the ICE BofA 1-5 Year US Corporate Index. Effective duration was 2.7 years on Oct. 29, against 5.7 years for AGG. Its 30-day SEC yield was 5.48% that day, and its total return over the year through Oct. 30 was 2.0%.

Vanguard Short-Term Corporate Bond ETF, VCSH, covers the same one-to-five-year band at 0.03%, with $43.9 billion on Sept. 30. It samples the Bloomberg U.S. 1-5 Year Corporate Bond Index. Its 30-day SEC yield was 5.43% on Oct. 29, and its one-year return at net asset value was 1.9% as of Oct. 31.

A broad investment-grade corporate fund had a different year. BlackRock's iShares Broad USD Investment Grade Corporate Bond ETF, USIG, charges 0.04% and earned an A from us. The bonds are still investment grade. Duration was 6.1 years on Sept. 30, more than twice IGSB's 2.7 years, and the total return over the year through Oct. 30 was a loss of 0.6%.

High-yield bonds pay more because the borrower may not pay.

State Street's SPDR Portfolio High Yield Bond ETF, SPHY, earned an A from us. It charges 0.05% and follows the ICE BofA US High Yield Index. Its total return over the year through Oct. 30 was 2.0%.

BlackRock's iShares iBoxx $ High Yield Corporate Bond ETF, HYG, earned a B from us, not an A. It charges 0.49% and tracks the iBoxx USD Liquid High Yield Index, a different index from SPHY. Against the 0.05% fee, that is $44 a year on $10,000. The indexes differ, so the return gap will not match the fee gap.

Municipal bond ETFs

Vanguard Tax-Exempt Bond ETF, VTEB, earned an A from us and charges 0.03%. It samples the S&P National AMT-Free Municipal Bond Index, investment-grade bonds whose interest is exempt from U.S. federal income tax and from the federal alternative minimum tax. The total return over the year through Oct. 30 was 0.1%.

The exemption matters in a taxable account, where that interest would otherwise be taxed by the federal government. It adds nothing in a retirement account, which already defers tax on the income.

In a taxable account, state income tax can still apply to municipal interest, depending on the state.

BlackRock's iShares National Muni Bond ETF, MUB, charges 0.05% and also earned an A from us. It returned 0.2% over the same year, on a different municipal index.

TIPS ETFs

"Inflation remains elevated," the Federal Reserve said on Oct. 28, and it restated a 2% goal.

September's personal-consumption expenditures price index rose 3.6% from a year earlier, the U.S. Bureau of Economic Analysis reported on Oct. 29.

Treasury inflation-protected securities, or TIPS, adjust principal for inflation.

Schwab U.S. TIPS ETF, SCHP, earned an A from us and charges 0.03%. It held $17.5 billion on Oct. 30 and tracks the Bloomberg U.S. Treasury Inflation-Linked Bond Index. Effective duration was 6.2 years on Sept. 30, so a 1 percentage point move in yields would be expected to move the price by 6.2%.

Schwab's 30-day SEC yield was 6.35% on Oct. 29. Schwab adjusts that yield monthly for changes in inflation, which is why 6.35% is not a cash yield to set beside a bill fund's 3.79%.

Long Treasury ETFs

The long-Treasury fund that earned an A from us is Vanguard Long-Term Treasury ETF, VGLT. It charges 0.03% and tracks the Bloomberg U.S. Long Treasury Bond Index. Vanguard reported $10.4 billion in the ETF on Sept. 30, when average duration was 13.2 years, more than twice AGG's 5.7 years. On that duration, a rise of 1 percentage point in yields would be expected to cut the price by 13.2%, before income.

Its 30-day SEC yield was 5.44% on Oct. 29, 0.41 percentage points above AGG that day. Vanguard's one-year return at net asset value was -4.2% as of Oct. 31.

BlackRock's iShares 20+ Year Treasury Bond ETF, TLT, is the larger fund, with $47.5 billion on Oct. 30. It earned a B from us and charges 0.15%, which is $12 a year more than VGLT on $10,000. Effective duration was 14.9 years on Oct. 29, so the same 1 percentage point rise in yields would be expected to cut the price by 14.9%. The 30-day SEC yield that day was 5.32%, 0.29 percentage points above AGG.