Should you be Buying Bond ETFs Instead of Stocks Right Now?

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By James Dennin for Kapitall

Investors are moving their money from stocks to bonds. Should you? We checked out 9 of the top bond ETFs.

Equity outflows in the US hit their highest levels on record this week as wealthy investors moved their money from riskier stocks and emerging market currencies into less risky assets like bonds.

This marks the first time that bonds have been more valuable than stocks since August when the stock market started a 12% bull run. Moreover, after four years of quantitative easing and depressed bond yields, the Fed's decision to taper its bond buying program is beginning to show effects in the market.

Many prestigious bond funds lost value last year, although that trend may reverse as investors reallocate money from stocks to bonds.

Click on the chart below to view data over time.

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As you can see from the chart, many of the biggest bond ETFs by market cap have been gaining value steadily throughout the week. It's less exciting than tracking stocks during last years boom market, but most have gained at least a few cents over the course of the week as more investors start to seek out more stable investments.

However there's certainly a counter-argument that would be offered by contrarians. The massive sell-off in the stock market indicates that those prices are declining across the board, even in healthy growth-businesses. Especially for younger investors with a higher appetite for risk, a sell-off in the stock market might indicate a strong buying opportunity, particularly if you think the US economy will do well in 2014.

Do you see investing opportunities in the bond market? Use the list below to begin your analysis.

1.iShares 1-3 Year Credit Bond (CSJ, Earnings, Analysts, Financials):Seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays U.S. 1-3 Year Credit Bond Index. Market cap at $12.2B, most recent closing price at $105.52.

2.iShares 1-3 Year Treasury Bond (SHY, Earnings, Analysts, Financials):Seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays U.S. 1-3 Year Treasury Bond Index. Market cap at $8.16B, most recent closing price at $84.53.

3.iShares 20+ Year Treasury Bond (TLT, Earnings, Analysts, Financials):Seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays U.S. 20+ Year Treasury Bond Index. Market cap at $2.77B, most recent closing price at $106.70.

4.iShares Core Total Aggregate US Bond (AGG, Earnings, Analysts, Financials):Seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays U.S. Aggregate Bond Index. Market cap at $15.53B, most recent closing price at $107.65.

5.iShares iBoxx $ High Yield Corporate Bd (HYG, Earnings, Analysts, Financials):Seeks investment results that correspond generally to the price and yield performance of the Markit iBoxx USD Liquid High Yield Index. Market cap at $14.10B, most recent closing price at $92.95.

6.iShares iBoxx $ Invst Grade Crp Bond (LQD, Earnings, Analysts, Financials):Seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Markit iBoxx USD Liquid Investment Grade Index. Market cap at $15.86B, most recent $117.50.

7.iShares Short Treasury Bond (SHV, Earnings, Analysts, Financials):Seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays U.S. Short Treasury Bond Index. Market cap at $2.39B, most recent closing price at $110.26.

8.iShares TIPS Bond (TIP, Earnings, Analysts, Financials):Seeks investment results that correspond generally to the price and yield performance of the Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L). Market cap at $12.65B, most recent closing price at $111.91.

9.Vanguard Total Bond Market (BND, Earnings, Analysts, Financials):Seeks the performance of a broad, market-weighted bond index. Market cap at $110.88B, most recent closing price at $81.05.

(List compiled by James Dennin. All data sourced from Zacks Investment Research.)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs , Bonds , Stocks


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