March 24, 2015

Bond Investment: Mutual Funds, ETFs, CEFs

Bond investment is popular among any investors. Bond is an instrument of indebtedness of the bond issuer to the bond holders. Typically bond issuer will pay certain yield on certain period for the holders. Bond may be issued by government or corporation. Bond issued by U.S. government is also known as U.S. Treasuries.

Bond features include:
    Bond Funds
  • Principal: Nominal or face amount on which bond issuer pay interest.
  • Maturity: The date when the issuer needs to repay the nominal amount is known as maturity.
  • Coupon: The coupon is the interest rate that the issuer pays to the holder.
  • Yield:  The rate of return received from investing in the bond is known as yield.
  • Credit Quality: Credit rating agencies may grade the bond quality issued by government or corporation.
  • Market Price: The present value of your bond is also known as market price.

How to Invest in Bond

There are many ways for investors to invest in bond. You can invest in individual bond through your brokerage. Other ways to invest is through bond funds including mutual fund, exchange traded fund, and closed end fund. You can also buy bond funds through your brokerages.

There are 2 main bond funds such as taxable bond funds and municipal bond funds. Taxable bond funds invest in government and corporate debts. The yield is usually taxable under federal tax and state tax. Municipal bond funds invest in municipality debts issued by U.S. states. The yield of muni bond funds is tax free from federal tax rate and state tax.

Bond Mutual Funds

Popular municipal bond mutual funds are:
Top taxable bond mutual funds are:

Bond ETFs

Top bond ETFs are:
  • Vanguard Total Bond Market ETF (BND)
  • iShares Core Total U.S. Bond Market ETF (AGG)
  • iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)
  • Vanguard Short-Term Bond ETF (BSV)
  • iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
  • iShares TIPS Bond ETF (TIP)
  • iShares 1-3 Year Credit Bond ETF (CSJ)
  • SPDR Barclays Capital High Yield Bond ETF (JNK)
  • iShares 1-3 Year Treasury Bond ETF (SHY)
  • iShares MBS ETF (MBB)
  • iShares Intermediate Credit Bond ETF (CIU)
  • iShares 7-10 Year Treasury Bond ETF (IEF)
  • iShares 20+ Year Treasury Bond ETF (TLT)
  • Vanguard Intermediate-Term Bond ETF (BIV)
  • PowerShares Senior Loan Portfolio ETF (BKLN)
  • iShares Short Treasury Bond ETF (SHV)
  • iShares National AMT-Free Muni Bond ETF (MUB)
  • SPDR Barclays Capital Short Term High Yield Bond ETF (SJNK)
  • iShares 3-7 Year Treasury Bond ETF (IEI)
  • iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB)
  • SPDR Barclays Capital Short Term Corporate Bond ETF (SCPB)
  • PIMCO Enhanced Short Maturity Strategy Fund (MINT)

Bond CEFs

Top municipal bond closed end funds are:
  • Nuveen Municipal Value Fund (NUV)
  • BlackRock Muni Target Term Trust (BTT)
  • Nuveen Municipal Opportunity Fund (NIO)
  • Nuveen AMT-Free Municipal Income Fund (NEA)
  • Nuveen Premium Income Muni 2 (NPM)
  • BlackRock MuniYield Quality III (MYI)
  • Nuveen Premium Income Muni Fund (NPI)
  • Nuveen Performance Plus Muni Fund (NPP)
  • Eaton Vance Municipal Bond Fund (EIM)
  • Invesco Muni Opps. Trust (VMO)
  • PIMCO Municipal Income II (PML)
  • Invesco Value Muni Income Fund (IIM)
  • Invesco Muni Investment Grade Trust (VGM)
  • Invesco Municipal Trust (VKQ)
  • BlackRock MuniYield Fund (MYD)
  • Nuveen Quality Income Muni Fund (NQU)
Popular taxable bond closed end funds:
  • PIMCO Dynamic Credit Income fund (PCI)
  • DoubleLine Income Solutions Fund (DSL)
  • AllianceBernstein Income Fund (ACG)
  • EV Limited Duration Income Fund (EVV)
  • PIMCO High Income Fund (PHK)
  • BlackRock Credit Allocation Income Fund (BTZ)
  • Aberdeen Asia-Pacific Income Fund (FAX)
  • BlackRock Corp High Yield Fund (HYT)
  • First Trust Intermediate Duration Preferred & Income Fund (FPF)
  • PIMCO Dynamic Income Fund (PDI)
  • BlackRock Build America Bond Fund (BBN)
  • Nuveen Credit Strategy Income Fund (JQC)
  • Nuveen Quality Preferred Income 2 (JPS)
  • PIMCO Corporate & Income Opportunity Fund (PTY)
  • AllianceBernstein Global High Income Fund (AWF)
  • Calamos Convertible & High Fund (CHY)
  • Templeton Global Income Fund (GIM)
  • Nuveen Preferred Income Opportunities Fund (JPC)
  • Calamos Convertible Opportunities & Income Fund (CHI)
  • Flaherty & Crumrine Preferred Secutiries (FFC)
  • Invesco VK Dynamic Credit Opportunities Fund (VTA)
  • Invesco Senior Income Fund (VVR)
  • Voya Prime Rate Trust (PPR)
  • AGIC Convertible & Income Fund (NCV)
  • Blackstone/GSO Strategic Credit Fund (BGB)
  • BlackRock Core Bond Fund (BHK)
  • BlackRock Debt Strategies Fund (DSU)
  • Western/Claymore Inflation-Linked Opportunities & Income Fund (WIW)
  • Western Asset High Income Fund II (HIX)
Other categories of bond funds are:

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