BND — Vanguard Total Bond Market ETF
BND provides broad exposure to the US investment-grade taxable bond market, including Treasuries, agency bonds, corporate bonds, and mortgage-backed securities. With over 10,000 bonds and an expense ratio of just 0.03%, it is one of the most cost-efficient ways to own the entire US bond universe. The fund rebalances continuously and is widely used as the fixed-income core in three-fund portfolios. Duration is typically around 6 years, giving moderate interest rate sensitivity.
Top Holdings
Strategy
- →Hold as the fixed-income sleeve of a diversified portfolio alongside a total US equity fund
- →Use to reduce overall portfolio volatility and add negative correlation to equity risk
- →Pair with BND's international counterpart BNDX for global bond diversification
- →Rebalance annually back to target allocation to maintain desired equity/bond split
Best For
- ✓Long-term investors who want a single, low-cost bond fund for their entire fixed-income allocation
- ✓Passive investors following Bogleheads three-fund or two-fund portfolio strategies
- ✓Retirement savers looking to gradually shift from equities to bonds as they age
- ✓Investors who prefer market-cap-weighted, unmanaged bond exposure with minimal tracking error
Key Risks
- ⚠Interest rate risk — rising rates cause bond prices to fall; duration of ~6 years means roughly 6% price drop per 1% rate rise
- ⚠Credit risk is low but not zero — corporate bond component can widen during recessions
- ⚠Inflation risk — nominal bonds lose purchasing power when inflation exceeds coupon rates
- ⚠Low yield environment risk — in low-rate periods, income generation is minimal after inflation
Similar ETFs
Frequently Asked Questions
What does BND invest in?
BND tracks the Bloomberg US Aggregate Float Adjusted Index, holding over 10,000 US investment-grade bonds including Treasuries, agency mortgage-backed securities, corporate bonds, TIPS, and municipal bonds. This is educational content, not financial advice.
Is BND safe during a stock market crash?
BND historically has negative or low correlation with equities, often rising when stocks fall sharply. However, it is not risk-free — rising interest rates can cause BND to decline even when stocks are stable. This is educational content, not financial advice.
What is BND's expense ratio?
BND charges 0.03% annually, which means you pay $3 per year on a $10,000 investment. This makes it one of the cheapest bond ETFs available. This is educational content, not financial advice.
Does BND pay dividends?
Yes. BND distributes monthly dividends derived from interest income on its bond holdings. The yield fluctuates with interest rate conditions and the composition of its portfolio. This is educational content, not financial advice.
How does BND differ from AGG?
BND and AGG are nearly identical in composition — both track variants of the Bloomberg US Aggregate Bond Index. BND uses a float-adjusted version while AGG uses the standard index. Both charge 0.03%. The choice is mainly a matter of brokerage preference. This is educational content, not financial advice.
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