For individuals planning for retirement, a mix of equity and fixed income investments is typically recommended. Young investors with a long time horizon before retirement may lean towards equity investments due to their potential for long-term growth. As retirement approaches, it’s common to shift towards safer investments like bonds and fixed-income securities.
Choosing the right bond investments can be challenging, despite the bond market being larger than the stock market. In 2023, the global bond market was valued at approximately $140.7 trillion, surpassing the global equity market valued at $115 trillion, as reported by the Securities Industry and Financial Markets Association.
Top bond funds for retirement portfolios
Consider these top bond funds for inclusion in your retirement portfolio:
*Note: Data as of Aug. 12, 2024
iShares Core U.S. Aggregate Bond ETF (AGG)
The iShares Core U.S. Aggregate Bond ETF offers exposure to the U.S. investment-grade bond market, with over 70% of the fund invested in AAA-rated securities.
- 5-year annualized return: 0.04 percent
- Yield: 3.41 percent
- Expense ratio: 0.03 percent
Vanguard Total Bond Market ETF (BND)
The Vanguard Total Bond Market ETF aims to track the performance of a broad, market-weighted bond index, providing exposure to the taxable investment-grade U.S. bond market.
- 5-year annualized return: 0.09 percent
- Yield: 3.37 percent
- Expense ratio: 0.03 percent
Fidelity U.S. Bond Index Fund (FXNAX)
The Fidelity U.S. Bond Index Fund tracks the total return of debt securities in the Bloomberg Barclays U.S. Aggregate Bond Index, with at least 80% of assets invested in index securities.
- 5-year annualized return: 0.06 percent
- Yield: 3.18 percent
- Expense ratio: 0.025 percent
Where can you buy bond funds?
Bond funds are available for purchase at various online brokerages, with bond ETFs typically offered at most top online brokers. When considering mutual funds, it’s important to check if a specific fund is available at a particular broker using their mutual-fund screener.
Investors are encouraged to conduct thorough research into investment strategies before making decisions, as past performance does not guarantee future results.