What Are the Best All-in-One Bond Funds?
Rather than picking and choosing, perhaps you’d like to buy up a representative sampling of the total bond market? Then consider these options.
T. Rowe Price Spectrum Income (RPSIX)
Contact: 800-683-5660; T. Rowe Price
Type of fund: Actively managed mutual fund
Types of bonds: Anything and everything in bonds, with a smattering (currently 12 percent) in stocks
Average maturity: 7.6 years
Expense ratio: 0.69 percent
Minimum investment: $2,500 ($1,000 in an IRA)
This has been an industry leader since 1990.
Vanguard Total Bond Market ETF (BND)
Contact: 800-662-7447; Vanguard
Type of fund: Exchange-traded fund
Types of bonds: All higher credit quality, both government (about two-thirds) and corporate
Average maturity: 7.7 years
Expense ratio: 0.08 percent
Minimum investment: None
Introduced to the market in April 2007, this fund brings new meaning to low-cost, well-diversified bond investing. “BND is a great core bond holding,” says Ron DeLegge, host of the Index Investing syndicated radio show and publisher of ETFguide. If you prefer mutual funds to ETFs, this fund comes in mutual fund version, as well: With $3,000 or more, you can invest in the Vanguard Total Bond Market Index Fund Investor Shares (VBMFX), which carries an expense ratio of 0.20 percent; with $10,000 or more, you can invest in the Admiral Shares class (VBTLX), which carries an expense ratio of 0.08 percent, same as the ETF.