Stock volatility got a lot of attention earlier this year, but bonds have had a share of tariff-related volatility, too, and then some.
Concerns that a budget bill could add trillions to the country's debt and worries about the inflationary effects of tariffs pushed bond yields higher. (Bond prices and yields move in opposite directions.) A downgrade in U.S. credit from Moody's Ratings didn't help.
With this in mind, we decided it's a good time to check in with our favorite bond exchange-traded funds (ETFs).
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
As a group, the six bond funds in the Kiplinger ETF 20 have returned 5.5% over the past 12 months through the end of May, in line with the 5.5% gain in the Bloomberg U.S. Aggregate Bond Index.
All but one bond ETF beat the index. The Invesco Senior Loan ETF (BKLN) and the iShares Short Duration Bond Active ETF (NEAR) led the way, followed by the SPDR DoubleLine Total Return Tactical (TOTL), the Invesco BulletShares 2026 Corporate Bond (BSCQ) and the Fidelity Total Bond (FBND) funds.
A unique opportunity in bond ETFs
Trailing the Agg and the rest of the Kip ETF 20 bond funds over the past year was the Vanguard Tax-Exempt Bond (VTEB) fund. But it may be time to give munis a closer look.
The municipal bond market has been rocked since the start of the year, but for reasons that are more technical than fundamental.
A notable increase in muni-bond issuance in the first quarter of 2025, combined with reduced demand, was a drag on the relative performance of the sector, which consists mostly of securities rated double-A or better.
"Municipal bond fundamentals remain strong, with record-high state rainy-day funds and robust balance sheets," says Paul Malloy, head of municipals at Vanguard. Meanwhile, municipal revenue sources are largely insulated from tariff and trade risks.
"This unique market condition offers high-earning investors a chance to capitalize on attractive yields while benefiting from the stability and resilience of municipal bonds," says Malloy.
For investors in the 24% tax bracket, the fund's 3.9% yield is equivalent to more than 5.1%.
This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related Content
-
Your Medicare Costs Are Set to Soar: What to Expect Over the Next DecadeMedicare beneficiaries will face higher premiums, deductibles and surcharges starting in 2026 and continuing over the next decade. Here's what you need to know.
-
How Different Generations Invest and What They Can Teach YouBoomers, Gen Xers, millennials and Gen Zers are taking varying approaches to investing. Here's what they're doing and key lessons you can learn from them.
-
How Different Generations Invest and What They Can Teach You
Boomers, Gen Xers, millennials and Gen Zers are taking varying approaches to investing. Here's what they're doing and key lessons you can learn from them.
-
What One Widow's Ordeal Teaches Us About Marriage and MoneyA man charmed a 72-year-old widow into marriage, and then her accounts were seized to pay off his debts, highlighting the importance of background checks on potential spouses as well as prenuptial agreements.
-
Are You Getting a Gray Divorce? These Six Financial Strategies Come From a Financial PlannerManaging an equitable division of assets, selling a home, negotiating alimony and splitting retirement accounts are among the money matters that weigh as heavily as emotional issues.
-
Stocks Climb as Apple, Nvidia Soar: Stock Market TodayOracle joined in on the fun, too, after the software giant announced a C-suite shake-up.
-
How to Navigate Your Finances After Losing Your Spouse: Thoughts From a Financial PlannerIt's important you get involved in financial planning now so you're prepared and confident to make decisions when you potentially become your own financial manager.
-
The Tax Trap Snares Many Business Owners: A Financial Pro's Guide to 11 Strategies You May Be MissingPoor tax planning means many business owners are leaving money on the table for the IRS. This detailed guide from a financial adviser highlights strategies you may not be aware of.
-
The 'Ted Lasso' Effect: A Positive Outlook Really Can Strengthen Your Retirement PlanOptimism like that of the fictional soccer coach can surprisingly improve your retirement planning by encouraging better saving habits and a more positive outlook on your financial future.
-
Your Golden Years Just Got a Tax Break, But There's a CatchDon't fall for the 'tax-free Social Security' headlines. The OBBB offers a temporary tax deduction for certain retirees, which is different from eliminating taxes on benefits entirely — and it doesn't solve Social Security's long-term funding issues.
