10 Expert Strategies to Enhance Bond ETF Performance

Bond ETFs have emerged as a cornerstone for investors aiming to diversify and secure steady income. These funds aggregate hundreds or thousands of fixed-income securities into a single tradable unit, offering liquidity, diversification, and cost efficiency. Yet, many investors underutilize them, treating bond ETFs as passive holdings rather than dynamic tools.

The median expense ratio for U.S.-listed bond ETFs stands at 0.27%, significantly lower than the 0.60% median for mutual funds. However, focusing solely on expense ratios overlooks hidden costs like bid-ask spreads and tracking error. Savvy investors optimize for total cost, not just the headline fee.

Beyond cost, strategic adjustments—such as duration targeting, yield curve positioning, and credit quality rotation—can transform bond ETFs from static allocations into active portfolio engines. The interplay of rising rates, inflation expectations, and credit spreads demands a nimble approach.