2013 has been a somewhat volatile year for the fixed income market, as investors continue to weigh the current low interest environment with the possibility of the Federal Reserve tapering its bond buying purchases. As a result, most bond ETFs struggled to keep up with the equity market’s quick pace, with many funds ending in the red in 2013 [see The Most Successful New ETFs of 2013].
There were, however, some bright spots in the space, including the SPDR Barclays Capital Convertible Bond ETF (CWB, B+) and the US Treasury Steepener ETN (STPP, C+). A number of funds from the High Yield Bonds ETFdb category also made the best performers list.
Longer-dated Treasury bond funds took the biggest hit in 2013, including the 25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ, C+) and the Extended Duration Treasury ETF (EDV, B). Not surprisingly, several emerging market bond ETFs also found themselves at the bottom of the barrel.
Below, we highlight 2013’s best and worst Bond ETF performers.
Please note that the year-to-date ETF returns featured below are as of as of December 11, 2013: