Vanguard Total Bond Market

BND

Market cap $147B

2026 could see a market rotation that finally favors more cyclical and defensive areas of the market. Bonds and dividend stocks are two areas that could benefit from a growth slowdown in the U.S. economy.

Looking for consistent income in retirement beyond Social Security? Need more frequent payouts than the quarterly dividends that come from many stocks and exchange-traded funds (ETFs)?

Vanguard Total Bond Market ETF remains a buy, offering solid returns and attractive yield relative to cash and global peers. BND's yield to maturity is 4.3% with a 5.9-year duration, providing confidence in expected returns for long-term holders. Corporate credit spreads are near century lows, making Treasuries and securitized government debt appealing alongside BND's 49% non-government exposure.

2025 capped off another strong year for fixed income ETFs, as ongoing market uncertainty pushed more investors into the safe confines of bonds. When it came to inflows, it was Vanguard that was well-represented with four funds cracking the top 10.

In terms of sheer size, DWS may not compete with the Vanguards and BlackRocks in the ETF space when it comes to garnering the most market share. However, it does something to discern itself from the masses: offer unique ETF products.

When you look at dividend yields in the 2-4% range, you might think they are easy to dismiss as not being worth your time.

Current market valuations are near dot-com bubble highs, especially in AI leaders, where the P/S are just extreme. The fact that we have entered 2026 with an active 3-year bull run does not help either. However, we have to be also mindful of the risk that comes with such a thinking - i.e., the risk of incurring painful opportunity cost.

2025 has been a year marked by uncertainty and 2026 could feature more of the same. Nonetheless, it's never too early for fixed income investors to position their portfolios to capture opportunities in the new year.

Undoubtedly, 2025 has been the year of artificial intelligence (AI) dominating the financial news headlines. With the end of the year just around the bend, valuations appear questionable, but fixed income continues to look appealing.

Undoubtedly, 2025 has been the year of artificial intelligence (AI) dominating the financial news headlines. With the end of the year just around the bend, valuations appear questionable, but fixed income continues to look appealing.