As an investor, it pays to take a look at where you're putting your money. Bond index funds can be well worth your consideration if you're careful in your selection and make the right choices. Currently the market is on an upswing for certain areas. The Nasdaq composite has broken a few records recently and we can tip our hats to Google for the 16% mega cap in a single day. Bond index funds can help you get ready for retirement and there are a few that show promise of tripling, making them among the best choices when you're looking for a safe bet. We've put together a list of the five safest bond index funds on the market today to give you a few investment opportunities to think about.
iShares Barclays 1-3 Year Treasury Bond Fund (SHY)
You may wonder why it's a good idea to invest in Treasuries with the impending rates raises expected in 2019. While it is a guarantee to drive up yields and push down prices, short term bond funds are not as vulnerable to hikes in interest rates. With fewer coupon payments and interest rates that fall below prevailing figures, SHY and others like it are a low risk. The bond funds perform well enough with positive return rates for short term investment far higher than the negatives. This is a nice track record to consider when you're looking at a the last three cycles for a cumulative figure. SHY is a good investment for creating a store to spring into action when a correction plummets stock prices. While there may not be a high yield, it's a good cash alternative when the seas get stormy and it can bolster the ETF's price.
ProShares Short S&P500 ETF (SH)
ProShares Short (SH) is created to assist yo in making money when the market declines. It's a hedge on the market and when the S&P 500 rises, you'll see the opposite happen with the SH ETF in equal proportions and when the market goes down, SH goes up. SH is a good alternative to selling and cashing out positions when the market declines. It can save you money in the transaction fees and potentially, events triggering taxation. It's good for helping you recover some of your losses when the market sags on your investments. SH is safest when there is no market correction. The only real risk is a bull run.
Market Vectors Preferred Securities ex Financials ETF (PFXF)
Preferred stocks are good for sitting at a stable rate without much excitement one way or the other. They're a good option when you don't want to take a big risk and your preference is to count on the yield. PFXF is literally preferred stocks from companies that exist outside of the financial arena. Their holdings include telecom companies, Real estate investment trusts and electric utilities. These include Tyson Foods, Southwestern Energy and ArcelorMittal. This bond charges only 0.4% while generating a yield of 6.1%. There is a concern about its sensitivity to rates, but it's still a good deal when you don't want to jump into rough waters with your investment dollars.
PowerShares S&P 500 Low Volatility Portfolio (SPLV)
The expenses for SPLV are 0.25 which comes out to $2.50 for every thousand dollars. The Low Volatility Portfolio is designed to hold up under volatility when there is uncertainty. The past 12 months has shown SPLV to have among the lowest realized volatility. An unforeseen drop in one of the holdings won't send SPLV into a plummet. Their holdings include Chubb, Stericycle and Progressive. The healthcare waste disposal service is a positive for maintaining consistency. While SPLV has only been around for seven years, the returns have had their ups and downs, particularly during a bull market, but when the market makes a downturn, the true worth is realized with sturdy holdings that maintain strength when others take a dive. The yield is decent at 2.1%.
Vanguard Dividend Appreciation (VIG)
The expenses for VIG are 0.1%. It's not the best dividend fund as thee yield is 2.2%, slightly higher that SPLV, but its worth is found in its quality for holding up when the market is choppy. VIV is a collection of stocks that have increased in their value over the past decade, but this doesn't translate into high yields. It does have staying power in a down turn. It is more resistant to decline than many of the other index bonds. It is one of the cheapest funds for investors to get in on and it will hold its own even when there is trouble in the market. VIG offers a safe and stable ROI.
Written by Garrett Parker
Read more posts by Garrett Parker