3 Top Bond ETFs to Consider as Bond Yields Rise

Recently, the yield on the 30-year Treasury bond hit its highest level since 2007. Talk that inflation from the Iran war might lead the Federal Reserve to raise interest rates has driven bond yields up and bond prices down.

Given how attractive bond yields look today, should investors make a bet on bonds?

Probably not, says Morningstar portfolio strategist Amy Arnott: “I think it’s always tempting to look at what’s going on in the world with inflation or the economy and try to tailor your portfolio. As we’ve seen with tactical allocation funds, even professional investors have had a really difficult time shifting their portfolio allocations based on market events.”

Instead, think of bonds as ballast for your equity portfolio, says Morningstar’s director of personal finance Christine Benz. How to use bonds in your portfolio—and in what proportion—depends on your life stage, not on what’s going on in the market. For bond exposure, Benz recommends high-quality intermediate-term core bond funds.

What Are Intermediate Core Bond Funds?

Intermediate-term core bond portfolios invest primarily in investment-grade US fixed-income issues, including government, corporate, and securitized debt, and hold less than 5% in below-investment-grade exposures. Their durations (a measure of interest rate sensitivity) typically range between 75% and 125% of the three-year average of the effective duration of the Morningstar Core Bond Index.

3 Top Bond ETFs to Consider as Bond Yields Rise

The three core bond exchange-traded funds below all practice passive strategies and are among the largest ETFs in the category. They also earn a

of Gold with 100% analyst coverage and fall into the intermediate core bond . All data is as of May 20.

1. Schwab US Aggregate Bond ETF SCHZ
2. Vanguard Total Bond Market ETF BND
3. iShares Core US Aggregate Bond ETF AGG

Morningstar expects the highly rated, low-cost intermediate core bond funds on this list to outperform their peers over a full market cycle.

Here’s a quick look at each of these top intermediate core bond ETFs. Be sure to review a fund’s complete report for more details.

Schwab US Aggregate Bond ETF

• : $10.2 billion

• Morningstar Medalist Rating

  : Gold

• Prospectus Net Expense Ratio

  : 0.03%

• SEC Yield: 4.28%

Schwab US Aggregate Bond ETF SCHZ is one of two top bond ETFs on our list that track the Bloomberg US Aggregate Bond Index.

The benchmark sweeps in fixed-rate, taxable, investment-grade US bonds with at least one year remaining until maturity. Qualifying bonds must have at least USD 300 million in outstanding face value, with higher minimums for some securitized fare. The index is market-value-weighted and rebalances each month, a sensible approach that efficiently captures the contours of the taxable, US investment-grade bond market.

The issuing activity of the US Treasury determines a large part of the portfolio. As Treasury issuance has grown, they’ve become a bigger part of the portfolio. Treasuries have grown from less than 35% of the portfolio 10 years ago to more than 45% recently, almost 20 percentage points more than the average category peer’s stake as of January 2026. A typical peer invests much of the difference in securitized fare and some high-yield bonds.

While the fund’s quality leanings mute credit risk, it still courts interest rate risk. For the past decade, its average effective maturity and average effective duration, measures of interest rate sensitivity, both tended to be longer than the category norm. Throughout the late 2010s and early 2020s, the fund’s average effective duration was usually around six months longer than the category average. However, as the US government has refinanced into shorter-term debt, the fund’s average effective duration has fallen faster than the norm and is now almost the same as its average category peer.

Reduced credit risk translates to a lower average coupon than peers who can invest in riskier bonds. The fund’s average coupon was 34 basis points below that of the category average as of January 2026. However, prevailing interest rates give even the safest portfolios appetizing yields. The fund’s Securities and Exchange Commission yield of 4.11% is more than double what it was in early 2022.

Read Morningstar’s full report on Schwab US Aggregate Bond ETF.

Vanguard Total Bond Market ETF

• : $389.7 billion

• Morningstar Medalist Rating

  : Gold

• Prospectus Net Expense Ratio

  : 0.03%

• SEC Yield: 4.46%

The largest fund on our list of top bond ETFs to consider, Vanguard Total Bond Market ETF BND differs from the others as the index it tracks is float-adjusted.

Vanguard Total Bond Market’s expansive portfolio and razor-thin fee preserve its advantage in the intermediate core bond Morningstar Category.

The fund tracks the Bloomberg US Aggregate Float Adjusted Index, which captures investment-grade, fixed-rate, taxable bonds denominated in US dollars. The index has different minimum size requirements for each type of bond, which helps the index remain investable given the large asset base following it. While it captures a broad swath of the bond market, the index excludes riskier types of bonds, such as eurodollar bonds, non-ERISA-eligible commercial mortgage-backed securities, and bonds with equity features. It weights selected holdings by market value after reducing the amount outstanding for bonds held by the Federal Reserve to adjust for float.

This weighting scheme tilts the fund toward the largest issuers, resulting in an overweight position to US Treasuries compared with category peers. The fund tends to park around 40%-50% of its assets in these instruments versus 30% for the category average. A heavy dose of Treasuries translates into a relatively high-quality portfolio. Over 70% of the portfolio carries a credit rating of AAA or AA, or around 10 percentage points higher than the category average as of February 2026.

This conservative risk profile can help performance during credit shocks. For instance, the fund outpaced its category average during both the 2008 global financial crisis and the March 2020 coronavirus drawdown. However, this can also hurt when credit risk pays off. This occurred most recently when credit spreads compressed after the volatile market in early April 2025. Its actively managed peers can lean into riskier assets to find pockets of opportunities.

Adjusting for float steers the index away from agency MBS compared with its category peers and the Bloomberg US Aggregate Bond Index—its non-float-adjusted counterpart. Still, this sector makes up around 20% of the portfolio, and it’s the fund’s third-largest sector allocation after Treasuries and corporate bonds.

The fund’s average duration has come back in line with the category average, standing under 6 years as of February 2026. Recently, low interest rates incentivized issuers to borrow more for longer terms and thereby lengthened the market’s average duration. The fund’s portfolio reflected this trend even as some peers kept a tighter leash on interest rate risk. While issuance activities can tilt its duration profile, its muted credit risk is still the main driver of category-relative performance. The fund’s broad scope and low fee should also provide a long-term performance edge.

Read Morningstar’s full report on Vanguard Total Bond Market ETF.

iShares Core US Aggregate Bond ETF

• : $134.8 billion

• Morningstar Medalist Rating

  : Gold

• Prospectus Net Expense Ratio

  : 0.03%

• SEC Yield: 4.46%

Like the other top bond ETFs on our list, iShares Core US Aggregate Bond ETF AGG charges a low fee for broad exposure to the US bond market.

IShares Core US Aggregate Bond’s steady portfolio makes its cheapest share classes attractive.

The fund tracks the Bloomberg US Aggregate Bond Index, which includes taxable, investment-grade US bonds with at least one year remaining until maturity. Its final portfolio is market-value-weighted, which emphasizes the most liquid issues and harnesses the market’s collective wisdom of each bond’s relative value.

The portfolio is shaped by the issuing activity of the US investment-grade market, which is heavily influenced by the US Treasury. Treasury securities now claim more than 45% of the portfolio after increasing their share of the total bond market in recent years. The average rival in the category also owns more Treasuries than it used to, but it still has far less in Treasuries—typically around 30%—than this portfolio does. Competitors own more securitized fare to make up the difference.

The big government-bond stake, however, mutes credit risk. About 75% of fund assets are in securities with AA or AAA credit ratings, several percentage points higher than the average Morningstar Category peer. Unlike some peers, the fund cannot hold below-investment-grade debt. Omitting high-yield bonds and focusing on ultrasafe government securities may restrict the fund’s return or yield potential, yet it also should insulate it from the volatility of riskier bonds.

This fund won’t always be less volatile than its average peer, though. Until recently, it has had a longer average effective duration, a measure of interest rate sensitivity, so rate changes can nudge its return more than comparable portfolios with shorter durations. Indeed, in the 10 years through February 2026, the US exchange-traded version of this strategy was more volatile than its average peer, as measured by standard deviation.

Read Morningstar’s full report on iShares Core US Aggregate Bond ETF.

How to Screen for More Top Bond ETFs to Consider as Bond Yields Rise

Investors can use the Morningstar Investor Screener to create a larger list of core bond ETFs and mutual funds to investigate further. Here’s how to get started and possible filters to use.

Access the prebuilt screen. Visit Morningstar.com’s Core Bond Funds list. Click on the blue “Screen with Investor >” button. The full list of all core bond funds and ETFs will populate in the screener. From there, you can filter on other metrics that matter to you.

Medalist Rating (Overall): You can choose to filter the list by Medalist Rating, focusing on mutual funds and ETFs with our highest ratings of Gold, Silver, and Bronze.

Share Class Type: The core bond funds list includes both mutual funds and ETFs. If you want to narrow the list to ETFs only, click on the Share Class Type drop-down box and select ETF.

Passive or Active Strategies Only: The core bond funds list includes ETFs and funds practicing both active and passive strategies. If you want to focus only on passive strategies or active strategies, not both, click on the blue “Screen with Investor >” button. In the pop-up box, select Basics, then Index Fund. Back in the left-hand navigation, choose either “Yes” or “No” in the Index Fund drop-down box, depending on whether you want to filter only on passive funds or only on active funds.

Using the “+ Filter” button, you can continue to further filter your list by expenses, branding name (think of that as an asset manager), and other factors.