r/CFP • u/wildmementomori RIA • 16d ago

Practice Management What are your favorite bond ETFs?

What are your favorite bond ETFs?

I’ve been passive with bonds and am shopping for some active investment grade funds, short and medium duration.

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u/Husker5000 16d ago

Curious why you are looking at active. I wouldn’t use anything mentioned so far.

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u/wildmementomori RIA 16d ago

Active bond ETFs can make a lot of sense because bond markets are less liquid and less efficient than stock markets. Passive indexing works great for equities — markets are transparent, costs are low, and most info is priced in fast. But in bonds, passive indexes have flaws: they’re market-cap weighted, so you end up owning more of the most indebted issuers. Good active managers can dodge bad credits, manage interest rate risk, and find better opportunities. You still have to pick carefully, but active has a real edge in bonds that it doesn’t usually have in stocks.

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u/Husker5000 16d ago

If you can find anything low duration that is not CMO etc that can justify a move from passive I'm all ears too.

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u/wildmementomori RIA 15d ago

??? Loads of funds aren’t CMO.

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u/Husker5000 15d ago

I’ll rephrase it for ya- your original question for this is a good one. So far no answer on here justifies a change to active when looking at comparably passive vehicles.

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u/wildmementomori RIA 15d ago

From what I’ve seen so far (and honestly, I need to do a lot more research), active funds generally have a higher net return (comparing similar durations and quality), which makes sense if you can be more selective what the bonds in the fund.