BND News & Analysis
3 articles
Market Mood
10-Year Treasury Yield Hits Highest Level Since 2007
The 10-year treasury yield reached its highest level since 2007 due to a bond market selloff, leading to unrealized losses for investors holding bond mutual funds or ETFs. Both the Vanguard Total Bond Market Index Fund ETF (BND) and the iShares Core U.S. Aggregate Bond ETF (AGG) are down more than 3.5% year to date. Investors are encouraged to consider tax-loss harvesting - selling at a loss to offset gains in other investments - as continuing high yields could offer potential opportunities. This strategy allows investors to manage tax liabilities and improve yield efficiency during market volatility.
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Bond ETF BND Tax Mistake Costs Retirees $6,600 Annually
Holding taxable bond ETFs like Vanguard's Total Bond Market ETF (BND) in a taxable brokerage account can reduce after-tax returns significantly. For a $400,000 bond allocation, the after-tax return could yield approximately $6,600 less wealth annually compared to the pre-tax return. This tax impact arises mainly because much of BND's income is taxed as ordinary income. Retirees may find municipal bonds such as VTEB more tax-efficient for their portfolios. This information is crucial for investors to maximize returns in retirement accounts by selecting appropriate bond investment vehicles.
Read More: Bond ETF BND Tax Mistake Costs Retirees $6,600 Annually
Vanguard BND vs BSV: 9% Gains for Short-Term Bonds Over 5 Years
The Vanguard Total Bond Market ETF (BND) and the Vanguard Short-Term Bond ETF (BSV) have identical 0.04% fees. However, BSV recorded 9% gains over five years, while BND lost 1%. BND's forward yield is 3.0% with trailing distributions of $2.92 per share, contrasted with BSV's $3.12 per share and an annualized forward distribution of $3.19. This differentiation matters for investors, as most BND holders may not realize the risks linked to long-term bond holdings versus short-term options like BSV.
Read More: Vanguard BND vs BSV: 9% Gains for Short-Term Bonds Over 5 Years