Total Bond Fund
Candlefocus EditorTotal bond funds are not just limited to bonds issued by governments; they may contain debt instruments issued by corporations, supranationals, and various types of debt securities. These bonds may be categorized according to their credit quality, maturity and other factors, allowing investors to customize the fund’s characteristics to match their needs.
The primary appeal of total bond funds is their liquidity. They are purchased and sold like stocks, so investors can access their funds quickly and avoid the illiquidity and administrative hassle associated with buying and selling individual bonds.
Total bond funds are also typically far less expensive than individual bonds. These funds generally have an expense ratio of 0.2 percent to 0.5 percent, whereas other actively managed bond funds can have expense ratios of over 1 percent.
Vanguard’s Total Bond Market Index Fund is one of the most popular total bond funds on the market. This fund tracks the investment performance of the Bloomberg Barclays US Aggregate Bond Index and is ideal for investors who want a core bond allocation and who prefer the liquidity and transparency of a total bond fund.
Overall, total bond funds are an appealing option for investors who want a liquid option to invest in the bond market. They provide investors with exposure to a wide variety of fixed-income instruments, yet they are much less expensive than traditional bond investments. The Vanguard Total Bond Market Index Fund is one of the most popular total bond funds on the market and provides investors with a diversified, liquid and low-cost option for accessing the bond market.