5 Top ETFs to watch
The battle to be crowned largest
For the first time in the history of exchange-traded funds, the largest bond ETF doesn't belong to iShares. The $16.9 billion Vanguard Total Bond Market ETF (BND) has surpassed the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), which has $16.5 billion in assets. BND didn’t snatch the crown as much as it was lost by LQD, which saw $10 billion flow out this year as investors fearful of rising rates fled funds holding longer-dated bonds. BND itself has lost $1 billion in assets this year — but that’s $9 billion less than LQD.
BND has slightly less interest rate risk than LQD, and Vanguard Group’s products give wide exposure at rock-bottom prices. BND offers exposure to 16,000 government and corporate bonds for a 0.10 percent expense ratio, or $10 for every $10,000 invested. LQD has a 0.15 percent expense ratio and provides exposure to 1,100 bonds. Vanguard is becoming the Wal-Mart of exchange-traded funds, taking in 35 cents on every new dollar invested in U.S. ETFs. At this rate it could pass State Street Corp. (STT) in ETF assets sometime next year to take the No. 2 spot in ETF assets under management after BlackRock Inc. (BLK).