Getting the highest yields could mean that investors need to step out of their comfort zones when it comes to duration and location, which they can do with ETFs from Vanguard.
As mentioned, fixed income investors will need to go farther out on the yield curve and accept higher duration with funds like the Vanguard Extended Duration Treasury Index Fund ETF Shares (EDV ). The fund carries a low 0.07% expense ratio.
Per the fund description, EDV seeks to track the performance of an index of extended-duration zero-coupon U.S. Treasury securities. The fund employs an indexing investment approach designed to track the performance of the Bloomberg U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index.
This index includes zero-coupon U.S. Treasury securities (Treasury STRIPS), which are backed by the full faith and credit of the U.S. government, with maturities ranging from 20 to 30 years. The fund invests by sampling the index. At least 80% of its assets will be invested in U.S. Treasury securities held in the index.
Another option that mixes up the debt holdings is the Vanguard Long-Term Bond Index Fund ETF Shares (BLV ), which seeks to track the performance of the Bloomberg U.S. Long Government/Credit Float Adjusted Index. This index includes all medium and larger issues of U.S. government, investment-grade corporate, and investment-grade international dollar-denominated bonds that have maturities of greater than 10 years and are publicly issued.
As such, BLV can draw from a variety of options when it comes to bond investments. The common denominator with EDV is that the fund sticks to longer duration with debt holdings that exceed a decade.
Venturing Into Emerging Markets Territory
Another way to extract yield is by venturing outside the safe confines of U.S. bonds. One way is via emerging markets (EM) countries with funds like the Vanguard Emerging Markets Government Bond Index Fund ETF Shares (VWOB ).
VWOB seeks to track the performance of a benchmark index that measures the investment return of U.S. dollar-denominated bonds issued by governments and government-related issuers in emerging market countries. The fund employs an indexing investment approach designed to track the performance of the Bloomberg USD Emerging Markets Government RIC Capped Index.
All of the fund’s investments will be selected through the sampling process, and under normal circumstances at least 80% of the fund’s assets will be invested in bonds included in the index. The fund comes with a 0.28% expense ratio.
For more news, information, and strategy, visit the Fixed Income Channel.