Invest Yourself For a Better Retirement™

US Bond Funds

A US Bond Fund is either a mutual fund or Exchange Traded Fund (ETF) that is fully invested in bonds issued in US dollars by corporations, municipalities, or the US federal government.  Funds generally provide the investor with the convenience of buying into an existing, diversified portfolio of investments that follow an objective that is defined within the prospectus of the fund.

Funds generally fall into one of two categories:

Actively managed funds – These funds are managed by professional investment managers who seek to outperform the market by conducting research and identifying the most promising investment opportunities.  Because of the additional effort required to perform this research, and the additional trading that is often associated with these funds, they tend to charge investors larger fees.

Indexed, or Passive funds- These funds select investments that attempt to replicate the returns of a specified index.  In the case of US Bond funds, a typical index used is the Barclay’s US Aggregate Bond Index, which covers the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage backed securities (agency fixed-rate and hybrid ARM passthroughs), asset backed securities, and commercial mortgage backed securities.  Because these funds are passively invested, they do not require research or typically do not involve as much trading activity, which allows them to operate at lower expense levels, resulting in lower fees to you, the investor.


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