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Bond ETF

A Bond ETF (Exchange-Traded Fund) is a type of investment fund that trades on stock exchanges and is designed to track the performance of a specific index of bonds. These ETFs hold a portfolio of bonds, which can include government bonds, corporate bonds, municipal bonds, or other types of fixed-income securities. Unlike individual bonds, Bond ETFs can be bought and sold throughout the trading day at market prices, making them a flexible option for both short-term traders and long-term investors.

Example

An investor looking for diversified exposure to U.S. Treasury bonds might invest in a Bond ETF that tracks an index of various U.S. government bonds, allowing them to gain exposure to multiple bonds with a single purchase.

Key points

• Bond ETFs track the performance of a specific index of bonds.

• Provide diversification, liquidity, and low-cost access to the bond market.

• Traded on stock exchanges like individual stocks.

Quick Answers to Curious Questions

Bond ETFs offer diversification, easy access to the bond market, and liquidity, as they can be traded throughout the day like stocks.

Unlike individual bonds, which are typically bought and held until maturity, Bond ETFs can be traded daily and provide exposure to a portfolio of bonds.

Investors seeking a diversified bond portfolio with the flexibility of trading on an exchange might invest in Bond ETFs.