20 Best Bonds To Buy Now, Guide to Investing in Bonds

Bond funds are vital to diversify, get income, and manage risk. Bond funds expose you to various government, corporate, and municipal bonds without the hassle of buying individual bonds. In this guide, we’ll look at the 20 best bonds to buy now, that funds globally and get into the nitty gritty of their strategies, performance, and who they’re suitable for. We’ll also cover how to pick the best bonds to buy and wrap up the value of bond funds in your portfolio.

Are Bond Funds a Good Investment?

Bond funds are considered a safer investment than shares, with a steady income stream and lower volatility. They’re for conservative investors or those nearing retirement who want to preserve capital. Here’s why bond funds are a good investment:

Diversification: Bond funds invest in various bonds, spreading risk across different issuers, sectors, and maturities.
Income Generation: Bond funds generate income through interest payments, a consistent income stream in a low interest rate environment.
Capital Preservation: Bonds are less volatile than shares, so bond funds are a safer option in a market downturn.
Accessibility: Bond funds give you easy access to bonds without the hassle of buying individual bonds. They’re generally more liquid, making them easier to buy and sell.

But bond funds aren’t risk-free. Interest rate risk (where bond prices fall when rates rise) is a big one. Credit risk (the risk of a bond issuer defaulting) is another, especially in funds that include lower-rated bonds. Despite these risks, bond funds are still good for diversification and income, so they are worth considering for most portfolios.

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Top Bond Funds

Vanguard Total Bond Market Index Fund (VBTLX)

Vanguard total bonds market indext funds (VTBTLX) is on of the top on our best bonds to buy now

Strategy: Tracks the Bloomberg Barclays U.S. Aggregate Bond Index. Invests in over 9,000 bonds for broad diversification across sectors and maturities.
Expense Ratio: 0.05%. It’s the cheapest bond fund out there.
Dividend Yield: 2.50%. Income stream.
Avg. Return Since Inception: 3.5%. Consistent.
Who Should Invest: Investors looking for total U.S. bond market exposure with income and stability.

Fidelity U.S. Bond Index Fund (FXNAX)

Strategy: FXNAX tracks the Bloomberg Barclays U.S. Aggregate Bond Index. Invests in a diversified portfolio of U.S. investment-grade bonds, including government, corporate, and mortgage-backed securities.
Expense Ratio: 0.025%. Super low. Suitable for long-term investors.
Dividend Yield: 2.35%. Income stream.
Avg. Return Since Inception: 3.2%. Consistent.
Who Should Invest: For cost-conscious investors looking for a bond fund with minimal expenses and income generation.

PIMCO Income Fund (PONAX)

Strategy: PONAX is an actively managed fund that invests in a mix of global fixed-income securities, including high-yield bonds, emerging market debt, and other non-traditional fixed-income assets. It seeks to maximize current income while managing risk.
Expense Ratio: 0.79%. Higher due to active management.
Dividend Yield: 4.50%. Suitable for income investors.
Avg. Return Since Inception: 5.5%. From higher yielding investments.
Who Should Invest: For investors with higher risk tolerance who want above-average yields and are comfortable with active management.

iShares U.K. Gilts All Stocks Index Fund

Strategy: Tracks the FTSE Actuaries U.K. Conventional Gilts All Stocks Index. Invests in a diversified portfolio of U.K. government bonds (gilts)—high-quality government securities of varying maturities.
Expense Ratio: 0.10%. Low for a bond fund in this category.
Dividend Yield: 1.80%. Modest income.
Avg. Return Since Inception: 2.0%. Lower risk.
Who Should Invest: For conservative investors looking for stable returns from government bonds with capital preservation and modest income.

Jupiter Strategic Bond Fund

Strategy: Global bond fund investing in government, corporate, and high-yield bonds. Adjusts risk and return based on market conditions.
Expense Ratio: 0.73%. Actively managed.
Dividend Yield: 3.10%. Higher income.
Avg. Return Since Inception: 4.2%. Flexible.
Who Should Invest: Investors looking for a diversified bond fund with moderate risk and higher returns.

M&G Corporate Bond Fund

Strategy: Investment grade corporate bonds from blue chip companies to provide income and capital growth. A diversified portfolio of bonds with a focus on credit quality.
Expense Ratio: 0.65%. Reasonable for the sector.
Dividend Yield: 2.70%. Steady income.
Avg. Return Since Inception: 3.8%. Consistent.
Who Should Invest: For investors looking for a corporate bond fund with moderate risk, income, and capital preservation.

T.D. Canadian Bond Fund

Strategy: Canadian government and corporate bonds to generate steady income and low risk. Preserve capital while providing income through interest payments.

Expense Ratio: 1.09%. Typical for Canadian bond funds.
Dividend Yield: 2.40%. Steady income.
Avg. Return Since Inception: 3.0%. Consistent.
Who Should Invest: For conservative investors looking for a bond fund for income.

AMP Capital N.Z. Fixed Interest Fund

Strategy: Diversified portfolio of government and corporate bonds for stable returns and income. High-quality bonds to reduce risk and stability.
Expense Ratio: 0.85%. Reasonable for the sector.
Dividend Yield: 2.10%. Steady income.
Avg. Return Since Inception: 3.0%. Stable.

Fisher Funds NZ Bond Fund

strategy: Bonds with a balance of income and growth. Returns through a diversified portfolio.
Expense Ratio: 1.00%
Dividend Yield: 2.50%
Avg. Return Since Inception: 3.4%
Who for: Income and moderate growth.

Vanguard Australian Fixed Interest Index Fund

Strategy: Tracks the Bloomberg AusBond Composite 0+ Index. Government and corporate bonds. Stable returns and income through a diversified portfolio.
Expense Ratio: 0.20%
Dividend Yield: 2.20%
Avg. Return Since Inception: 3.3%
Who for: Conservative investors for broad bond exposure and stability.

Schroder Fixed Income Fund

Strategy: Actively managed fund investing in a diversified portfolio of fixed-income securities, government and corporate bonds. Strong risk-adjusted returns through active management.
Expense Ratio: 0.60%
Dividend Yield: 2.80%
Avg. Return Since Inception: 4.0%
Who for: Diversified bond fund for income and growth.

Macquarie Income Opportunities Fund

Strategy: Fixed income securities, high yield, and investment grade bonds. Maximize income.
Expense Ratio: 0.70%
Dividend Yield: 3.50%
Avg. Return Since Inception: 4.5%
Who;s for: Income-focused investors willing to take more risk for more return?

High-Yield Bonds: Definition, Types, How to invest in

iShares Euro Government Bond Index Fund

Strategy: Tracks the performance of Euro-denominated government bonds. European government securities. High-quality government bonds with various maturities.
Expense Ratio: 0.12%
Dividend Yield: 1.90%
Avg. Return Since Inception: 2.5%
Who for: Conservative investors for stable returns from high-quality government bonds.

PIMCO Euro Bond Fund

Strategy: Actively managed fund investing in Euro-denominated government and corporate bonds. Strong returns through active management and diversification.

Expense Ratio: 0.75%
Dividend Yield: 2.80%
Avg. Return Since Inception: 4.2%
Who Should Invest: For those who want an actively managed fund that invests in Euro bonds and balanced risk and return.

Allianz Euro Bond Fund

Strategy: This fund invests in investment-grade Euro government and corporate bonds. It aims to generate steady income while preserving capital, making it perfect for risk-averse investors.
Expense Ratio: 0.65%, competitive for an actively managed fund.
Dividend Yield: 2.50%, steady income.
Avg. Return Since Inception: 3.5%, because it’s all about quality and stability.
Who Should Invest: For conservative investors looking for a reliable source of income from a bond portfolio.

BlackRock Global Bond Income Fund

Strategy: This fund invests in a global mix of government and corporate bonds. It generates income and capital growth, so it’s a good option for investors.
Expense Ratio: 0.89%, typical for global funds.
Dividend Yield: 3.10%, decent income.
Avg. Return Since Inception: 4.0% because it’s global.
Who Should Invest: For investors who want global exposure in their bond portfolio with income and moderate growth.

Wellington Global Total Return Fund

Strategy: A global bond fund invests in government, corporate, and high-yield bonds. The fund aims to generate total return through income and capital growth.
Expense Ratio: 0.85% because it’s actively managed and global.
Dividend Yield: 3.20%, solid income.
Avg. Return Since Inception: 4.5% across all markets.
Who Should Invest: For those who want a global bond fund that’s all about total return, income, and growth.

T.Rowe Price Global Multi-Sector Bond Fund

Strategy: This fund invests in multiple bond sectors, including emerging markets, high yield, and investment grade. By investing across multiple bond sectors globally, risk and return are balanced.
Expense Ratio: 0.92% because it’s actively managed and multi-sector.
Dividend Yield: 3.40%, attractive income.
Avg. Return Since Inception: 4.8% across all conditions.
Who Should Invest?: This is for investors who want diversified exposure to multiple bond sectors and income and growth.

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How to Pick the Right Bond Fund

As you have studied all the best bonds to buy now, Choosing the right bond fund is critical to achieving your financial goals and a diversified portfolio. Here’s a more detailed guide:

Know Your Objectives:

Income Generation: Consider bond funds with higher dividend yields for regular income. Funds that focus on high-yield bonds or income strategies might be more suitable.
Capital Preservation: If capital preservation is your priority, look for bond funds that invest in government or high-quality, less volatile corporate bonds.
Total Return: For those who want a balance of income and growth, look for bond funds with total return

Assess Your Risk Tolerance:

Low Risk: Government bond funds or those focused on investment-grade corporate bonds are safer but have lower returns.
Moderate Risk: Funds with a mix of investment-grade and high-yield bonds return higher but are riskier.
High Risk: High-yield bond funds or those investing in emerging markets are the highest returning but riskiest.

Consider the Fund’s Duration:

Short Duration: Funds with shorter durations are less sensitive to interest rate changes and are good if you expect rising interest rates.
Long Duration: Funds with longer durations offer higher yields but more interest rate risk.

Look at the Expense Ratio

Lower expense ratios are better as they reduce the overall cost of investing and allow you to keep more of your returns. Passively managed bond funds have lower expense ratios than actively managed ones.

Review the Fund’s Historical Performance

Past performance does not indicate future results but shows how the fund has performed in different market conditions. Look for consistent performance over time, not short-term spikes.

Examine Credit Quality

Funds investing in higher-rated bonds (investment grade) are safer but have lower returns. Funds with lower-rated (junk) bonds return higher but are riskier.

Check Liquidity and Accessibility

Make sure the bond fund you choose is liquid and easy to trade, especially if you need access to your money.

Diversification Across Sectors and Geographies

Diversified bond funds that spread investments across different sectors and geographical regions can reduce risk and give more stable returns.

Consider the Tax Implications

Some bond funds offer tax advantages, such as municipal bond funds that may be tax-free. Understand the tax implications of your investments, especially if you’re in a high tax bracket.

Look at the Fund’s Management Team:

The experience and track record of the fund’s management team can make a big difference. Actively managed funds rely heavily on their managers, so choose a fund with a proven management team.

Role of Bonds in your Portfolio Diversification: Benefits of a Bond Portfolio

Summary

Bond funds are a great way to diversify your portfolio, generate regular income, and manage risk. The bond funds in this guide best bonds to buy now offer options for different investment goals and risk tolerance. Whether you want income, capital preservation, or total return, you have a bond fund.

The secret to successful bond fund investing is knowing your financial goals, assessing your risk tolerance, and choosing a fund that fits your investment strategy. By looking at expense ratios, fund duration, credit quality, and historical performance, you can make an informed decision that supports your long-term financial goals.