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Coming up with a list of the best bond ETFs to buy now may at first seem like it would include only funds that can perform well in an inflationary, rising-rate environment. But this would only be partially correct.
True, we've seen a ton of volatility in the stock market this year and increasing talk of a global recession, driven by both rising borrowing costs and rising commodity prices thanks to inflation. This has worked well for investors holding Treasury inflation-protected securities (TIPS) or ultra-short-term bonds in their portfolios, but with the most recent consumer price index (CPI) report showing inflation moderated in July, the time may be limited on these ideas.
Thankfully, bond ETFs cover a variety of strategies. So, it's a good idea to not only focus on the best investments for today's still-high inflationary environment, but also consider what the best investments could be down the road.
"We still think high-quality bonds play a pivotal role in portfolios as they have shown to be the best diversifier to equity risk," says Lawrence Gillum, fixed-income strategist at independent broker-dealer LPL Financial. "While we expect further gains for stocks through year-end, unforeseen events happen. And it's best to have that portfolio protection in place before it's needed."
For investors seeking out portfolio protection via the fixed-income market, here are the 10 best bond ETFs to buy now. The names featured here cover a variety of strategies, and given the tough year the bond market has faced, it could be a good time to dollar-cost average into bond funds that can perform well in the remainder of 2022 and beyond.