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ETF Specialist

Alternatives to the Aggregate

As the bond market’s barometer has become increasingly conservative, new indexed options have emerged.

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The Bloomberg Barclays U.S. Aggregate Bond Index is a broad, market-value-weighted index that includes U.S. dollar-denominated investment-grade corporate, government, and securitized (for example, asset-backed securities, mortgage-backed securities, and commercial MBS) debt with at least one year until maturity.

A passively managed fund replicating the Aggregate Index is a good option for a core bond holding. Given its conservative composition, returns will be less volatile than and uncorrelated to the equity market. The four exchange-traded funds in Exhibit 1 track the Aggregate Index (Vanguard Total Bond Market ETF (BND) actually tracks a float-adjusted version). All four have earned a Morningstar Analyst Rating of Silver on account of their broad diversification and low fees.

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Neal Kosciulek does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.