3 Bond ETFs to Buy to Play This Spike in Bond Prices

Despite some recent (and very significant) volatility in the fixed income market, bonds continue to be one of the only asset classes to see relative outperformance to stat 2025. 

That’s not to say all bonds are created equal, and investors looking at lower-grade bonds may not be feeling the same amount of love as those in high-quality corporates and Treasury’s. 

But the reality is that for investors seeking defensive exposure in this market, finding low-beta asset classes like bonds to invest in happens to be one of the best ways to protect oneself from downside volatility. And while the reality is that there are indeed some buying opportunities in the market, the outsized risk reflected in the VIX right now is likely to push some investors to the sidelines.

So, whether your base case is that we’re due for a recession, or that this is a garden-variety correction, having some exposure to bonds is a strategy I think may be worth getting behind. In that respect, these three bond ETFs are ones I think make sensed for investors who think bond yields could become more attractive (particularly as the Federal Reserve and other central banks continue to cut interest rates). 

iShares 7-10 Year Treasury Bond ETF (IEF)

The iShares 7-10 Year Treasury Bond ETF (IEF) is one of the top options in the market for investors seeking low-risk exposure to U.S. Treasury bonds.

Treasury are often considered to be the most attractive bonds to own for defensive investors, with the 10-Year Treasury widely considered to be the “risk free rate,” at least according to most economists.

Now, the truth is that we’ve seen some wild swings in the 10 Year as a result of the various tariff announcements, and how investors feel this quickly-shifting policy affects the attractiveness of holding any sort of U.S. government debt product. But it’s also true that for investors with a long-term investing mindset, holding an asset that’s backed by the most powerful country in the world makes sense.

This ETF tracks 7-10 year U.S. Treasurys so it fits the profile of the long-term investor seeking portfolio stability. And while interest rates are likely to continue to fluctuate in the months and quarters to come, it’s my view that the long-term trend lower in interest rates (as a function of governments’ ballooning debt loads) will continue.

If that’s the case, this ETF which provides investors with a current dividend yield of 3.59% is worth considering.

Vanguard Total Bond Market ETF (BND)

The Vanguard Total Bond Market ETF (BND) is a bond ETF targeted at investors seeking more broad exposure to the world of fixed income assets. Again, there are plenty of bonds outside of governments that can provide even higher yield. And while this risk premium is currently blowing out (meaning non-government bonds are seeing higher yields and lower prices), there could be more upside for investors looking to capture this risk premium right now.

If we are due for simply a garden-variety correction, this is the sort of fund that may outperform a Treasury bond ETF. That’s because the BND ETF tracks U.S. investment-grade bonds, encompassing a portfolio of corporate bonds, mortgage-backed securities and government bonds. It’s this diversification that provides reduced risk and a relative safe-haven status as a far as bond ETFs are concerned.

What I like particularly about this ETF is the fund’s 0.3% expense ratio, making BND one of the most cost-effective options in the market. For those looking to maximize long-term returns by minimizing fees, this is an excellent and highly-diversified option to consider right now.

Vanguard Short-Term Treasury ETF (VGSH)

The Vanguard Short-Term Treasury ETF (VGSH) is a bond ETF that’s more suited for conservative investors looking for a place to store cash.

Indeed, simply holding straight cash on one’s personal balance sheet is a guaranteed way to lose purchasing power over the long-term. Even if you believe the current CPI inflation rate is correct, dollars held in any account (and not invested) will lose around 3% of their value each and every year in perpetuity. If inflation increases, that number looks even worse.

So, for investors on the more conservative end of the spectrum looking to wait out this volatility and buy at lower prices, this ETF provides exposure to 1-3 Year U.S. Treasury, offering a yield of more than 4%. 

That’s a good place to park some cash and wait, if that’s one’s intention right now. When most institutional investors say they’re “moving to cash,” that means they’re considering such a fund (or money market funds) – they’re not actually parking their money in cash. This is the ETF I’d think about if you’re in such a category. 

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