What Is a Add up Bond Fund?
A total bond fund is a mutual fund or exchange-traded fund that seeks to replicate a inelegant bond index. A total bond fund owns many securities across a range of maturities, from both business and private sectors. The most common index used as a benchmark is the Barclays Aggregate Bond Index, which catches Treasury bonds, corporate bonds, municipal bonds and high-grade mortgage-backed securities.
Key Takeaways
- A total bond mine money tracks the performance of its underlying index, which in turn monitors the entire bond market.
- Investing in a total bind fund gives investors the same exposure to the bond market as more traditional bond investments allow, but advance a very liquid option in what is traditionally a very illiquid sector.
- In order for total bond funds to control, they need to have a similar maturity to the bonds in the underlying index.
- One of the most popular total bond greens is offered by Vanguard, and is called the Vanguard Total Bond Market Index Fund.
How a Total Bond Fund Disposes
Total bond funds may invest in bonds of similar maturity, class, and
Vanguard Total Bond Market Directory
The Vanguard Total Bond Market Index is designed to provide broad exposure to U.S. investment-grade bonds. Reflecting this ambition, the fund invests about 30% in corporate bonds and 70% in U.S. government bonds of all maturities (short-, intermediate-, and long-term proclaims). As of March 2020, the fund had a 10-year annualized return of 3.57%.
As with other bond funds, one of the risks of the fund is that bourgeons in interest rates may cause the price of the bonds in the portfolio to decrease—pricing the fund’s NAV lower. Because the fund ordains in all segments and maturities of the fixed income market, investors may consider the fund their core bond holding.