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Best Bond ETF BND, SCHZ, AGG OR LAG? |
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March
15, 2012: What is the
best exchange traded fund (ETF) for bonds that
attempts to track the Barclays Capital U.S.
Aggregate Bond Index? Here are the four choices I
want to consider. Send me an email if you
know of any others with the same characteristics
including low expense ratios.
SCHZ = Schwab U.S. Aggregate Bond ETF "The ETF seeks investment results that track, as closely as possible, before fees and expenses, the total return of the Barclays Capital U.S. Aggregate Bond Index. "BND: = Vanguard Total Bond Market ETF "The fund employs a “passive management”or indexing—investment approach designed to track the performance of the Barclays Capital U.S. Aggregate Float Adjusted Bond Index."AGG: = iShares Barclays Aggregate Bond The iShares Barclays Aggregate Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the total United States investment grade bond market as defined by the Barclays Capital U.S. Aggregate Bond Index.LAG = SPDR Barclays Capital Aggregate Bond ETF The SPDR® Barclays Capital Aggregate Bond ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance the Barclays Capital U.S. Aggregate Index (ticker: LBUSTRUU).First look at annual expenses. Schwab is the leader with the lowest as of today.
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Now lets look at performance
which is how well they track their index net of
expenses since the newest bond ETF, SCHZ, started
(first chart) and YTD for 2012 (second chart.)
![]() ![]() Schwab's SCHZ appears to
have higher volatility which may reflect lower
liquidity. For now, I'd probably pick one
of the other three. Fidelity gives you
free trades with iShares and Schwab gives free
trades with their funds in their accounts so you
need to calculate the small commission into the
total expenses. A small $7.95 commission
on a $10,000 bond investment adds 0.08% to the
annual fee if held for a year. Thus the
savings on commissions could be more significant
than the actual expense ratios! If you
are only buying $1,000 worth of a bond ETF, then
you for sure want to go where you can get it
without a commission!
I used the gains in my own stock portfolio these past years to "semi retire" in 1998 as I invested time to build up my online income from free articles, commissions for some products I recommend and selling newsletters. You can read about my success in this May 9, 2007 Los Altos Town Crier Newspaper Article (online version & PDF version.)
Long Term Results that Speak for
Themselves
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tweet this: Article: What is the Best Bond ETF? http://kirklindstrom.com/Articles/2012/0316_Best_Bond_ETF_BND_SCHZ_AGG_LAG.html $BND $SCHZ $AGG $LAG ==> Best CD Rates with FDIC <== |
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Disclaimer: The information contained in this web site is not intended to constitute financial advice, and is not a recommendation or solicitation to buy, sell or hold any security. This blog is strictly informational and educational and is not to be construed as any kind of financial advice, investment advice or legal advice. Copyright © 2012 Kirk Lindstrom. Note: "CORE & Explore®" was coined by and is a registered trademark of Charles Schwab & Co., Inc. |