Bond funds exist in three forms: open-end, closed-end, and exchange-traded. This post will only deal with the latter.
There are dozens of places where one could find a list of all the ETF bonds funds there are. But FinViz is convenient as any. Here are the categories they track:
If you select each category by itself and then ask to see how that category has performed in the past week, quarter, year, etc., you’ll discover that most bond ETFs offer no more return than just rolling a T-bill ladder would have, which is about 4% annually when the interest is discounted for the state income taxes typically avoided.
By convention, T-bills are considered “risk-free”, which we all know is a lie. But T-bills are “safer” --i.e., less volatile-- than bonds from other issuers or those of longer maturity. So, this is the key question: “If I can get 4% from holding a risk-free asset, how much more do I need to be paid to accept greater risk?”
Everyone will answer that question in different ways. But let’s assume that the risk-reward ratio is scalable. If a bond fund is half again risker than a T-bill, maybe a return of 6% to 8% would be needed from the ETF to make it attractive. If twice as risky, then maybe 10% would be needed. So let’s use 10% as an arbitrary cutoff. When that cutoff is applied to all bond ETFs, only two categories survive, those that target converts (such as CRVT, CWB, FCVT, ICVT) and those that target emerging market debt (such as ELD, EMLC, FEMB).
I am NOT saying that those seven bond ETFs are worth buying. I’m only saying that they seem to be the only ones worth tracking and, maybe, eventually, taking a position in if one is running a diversified portfolio that deliberately includes as part of its holdings some relatively lower risk assets.