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Burned by the Stock Market? Consider These ETFs Instead | Personal Finance

Data source: Vanguard, iShares.

As you can see in the table, the long-term corporate bond ETF produces the highest yield among all these picks, including the other two corporate bond funds.

Longer maturities tend to have higher yields because they are more sensitive to interest rate changes. If prevailing interest rates rise, the older, long-term bonds with lower-than-market coupon rates become less interesting to investors. Demand will drop, which pushes the secondary market value down, too.

Shorter-term bonds, on the other hand, get repriced (or paid off) more often because they reach maturity faster. At repricing, the rate is adjusted to whatever the market demands at that time.

Bond ETFs for stability and diversification

If the stock market‘s ups and downs aren’t for you, you might try bond ETFs. They yield more than you’d earn in a cash account and they’re less volatile than stock ETFs.


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