The Best and Worst Bond ETFs of 2014

by on December 22, 2014 | Updated December 24, 2014

It has been an interesting year for fixed income markets, as diverging monetary policies and mixed economic reports from across the globe played major roles in bond performances [see also The Best and Worst Performing Dividend ETFs of 2014].

In the U.S., the Fed officially ended its QE stimulus package, and began tapering its purchases every month. Many analysts believe the central bank will adopt a tightening monetary policy sometime next year, meaning rates will likely rise. Outside of the U.S., however, foreign central banks have continued with easy money policies, with some governments implementing additional stimulus measures to prop up lagging economies. These events have ultimately dictated bond markets in 2014.

Below, we highlight 2014’s best and worst Bond ETF performers. Please note that this list excludes inverse and leveraged ETFs (see All Bond ETFs) and the year-to-date returns are as of December 18, 2014:

The Best Performers


This year, longer-dated Treasuries ETFs were among the top performers, which included the popular 20+ Year Treasury Bond ETF (TLT). Also making the top performing list was the SPDR Nuveen Barclays Capital Build America Bond ETF (BABS), which made a significant turnaround from last year when the fund logged in an annual loss of 8.47%. 

The Worst Performers


High yield bonds were some of the worst performers in 2014, including the Peritus High Yield ETF (HYLD). Negative and short-term duration bond funds also suffered losses during the year. A foreign treasury and an emerging market bond ETF also made the worst performing list. 

The table below lists each ETF in the above charts:

ETF YTD Return
25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ) 45.32%
Extended Duration Treasury ETF (EDV) 40.39%
20+ Year Treasury Bond ETF (TLT) 24.98%
US Treasury Long Bond Bull ETN (DLBL) 24.72%
SPDR Barclays Long Term Treasury ETF (TLO) 23.27%
Long-Term Government Bond Index Fund (VGLT) 22.94%
SPDR Nuveen Barclays Capital Build America Bond ETF (BABS) 20.90%
DB Italian Treasury Bond Futures ETN (ITLY) 19.43%
Core Long-Term U.S. Bond ETF (ILTB) 18.52%
Long-Term Bond ETF (BLV) 18.41%
US Treasury Steepener ETN (STPP) -16.74%
Peritus High Yield ETF (HYLD) -13.17%
BofA Merrill Lynch High Yield Bond Negative Duration Fund (HYND) -13.13%
S&P/Citi 1-3 Yr Intl Treasury Bd (ISHG) -9.64%
SPDR Barclays Capital Short Term International Treasury Bond ETF (BWZ) -9.21%
Barclays U.S. Aggregate Bond Negative Duration Fund (AGND) -8.38%
Global ex USD High Yield Corporate Bond Fund (HYXU) -7.58%
Emerging Markets Local Debt Fund (ELD) -7.23%
B-Ca Rated Corporate Bond Fund (QLTC) -6.34%
High Yield Interest Rate Hedged ETF (HYHG) -5.69%

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Disclosure: All data as of 12/18/2014. No positions at time of writing.