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ETF Specialist

The Conservative Vanguard Total Bond Market ETF

This ETF takes less credit risk than most of its peers, so it offers a lower yield, but its cost advantage gives it a durable edge.

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 Vanguard Total Bond Market ETF (BND) is a solid, low-cost option for core exposure to investment-grade bonds. It efficiently tracks the Barclays U.S. Aggregate Float-Adjusted Bond Index, which tilts toward high-quality investments. The fund's heavy exposure to U.S. Treasuries and agency mortgage-backed securities somewhat limits its return potential. However, its sizable cost advantage should translate into attractive risk-adjusted performance relative to the intermediate-term bond Morningstar Category over a full market cycle, supporting the Morningstar Analyst Rating of Silver.

The fund offers broad exposure to liquid, U.S.-dollar-denominated investment-grade bonds with a least one year until maturity. This creates a well-diversified portfolio consisting of thousands of securities. It weights them by float-adjusted market capitalization, tilting the portfolio toward low-yielding and relatively secure government bonds and agency MBS. These high-quality bonds form just over 60% of the portfolio.

Alex Bryan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.