Vanguard Long-Term Bond ETF

BLV

Market cap $5.89B

After the Fed just cut rates a second time this year, a steeper yield curve could force bond investors to reconsider the long end again. That said, they can play the long game with ETF options from Vanguard that focus on maximizing yield by investing in bonds with maturity dates extending past 10 years.

Vanguard Long-Term Bond Index Fund ETF Shares offers diversified exposure to long-duration, investment-grade US government and corporate bonds with a low 0.03% expense ratio. BLV is highly sensitive to interest rate movements, benefiting from falling long-term rates and stable credit spreads, making it a strong counterweight in portfolios. Current macro indicators suggest a favorable environment for BLV, with gradual Fed rate cuts and contained credit spreads supporting potential price appreciation.

With an eye on mitigating rate risk, short-term bond funds have been the apple of fixed income investors' eyes the past few years. But with rates falling, those same eyes may be wandering and looking at long-term bond ETFs.

Many investors focus primarily on stocks. However, the global bond market is even bigger than the stock market.

BLV's long duration amplifies both risk and potential reward, making it highly sensitive to interest rate changes and recent market volatility. Current yields are attractive, but tight credit spreads and economic uncertainty suggest caution, especially for investors wary of corporate credit risk. Investors seeking stability may prefer shorter-duration or treasury-only funds, as BLV's volatility can be significant in the near term.

BLV offers diversified exposure to long-term, investment-grade US government and corporate bonds, but is highly sensitive to interest rate changes due to its long duration. Current macro metrics indicate stabilization and potential for future rallies, yet recent positive convexity and monetary easing expectations have already boosted BLV's performance. Fed policy shifts, especially QE and balance sheet changes, significantly impact BLV's NAV; recent trends show increased demand for long-maturity bonds.

The Vanguard Total Bond Market ETF (BND 0.19%) is the biggest exchange-traded fund (ETF) focused on the bond market, with over $129.5 billion of assets under management . As the name suggests, BND provides investors with broad exposure to the bond market.

Exchange-traded funds (ETFs) are sort of like ice cream: There's a flavor that should appeal to every person.

The Vanguard Long-Term Bond Index Fund ETF (BLV) is currently a 'Sell' due to unfavorable macro conditions and narrow corporate spreads. BLV's long duration of 13.5 years makes it highly sensitive to changes in corporate credit spreads and long-term interest rates. Corporate spreads are at historic lows, and rising risk-free rates due to U.S. debt concerns pose significant downside risks.

Quite a few stocks gained momentum in the weeks preceding Donald Trump's second inauguration as U.S. president. It was a different story for most bonds, though.