Best Bond Funds

Are you looking for an alternative investment strategy to increase your financial assets? Putting your money behind stocks can be risky and real estate investments can be overpriced for new investors. In such cases, you can consider investing in bond funds to accelerate your monetary growth and secure your financial future. 

Quick Look: The Best Bond Funds

• Invesco WilderHill Clean Energy ETF
• ARK Genomic Revolution
• ProShares UltraPro QQQ
• ARK Next Generation Internet ETF
• Direxion Daily Technology Bull 3X Shares

What are Bond Funds?

Bond funds are financial investments backed up by bonds rather than stocks. The stock market has thousands of companies listed that are open to trade. But unlike stocks, these funds offer investors a gamut of companies or multiple bonds in a single trade. Depending on the investment policies, bond funds can consist of government bonds, municipal bonds, corporate bonds and mortgage-backed securities. 

Based on your financial goals, you can invest in bond mutual funds or exchange-traded funds (ETFs) to instantly diversify your stock portfolio. A majority of these types of bond funds track indices that mirror the performance of top companies in the U.S. Bond funds are regularly monitored by professional fund managers to optimize the returns on your investments.    

Best Bond Funds Right Now

Bond funds can create a sustainable and stable source of income for beginners and seasoned investors. There are tons of bond mutual funds and ETFs that you can choose to invest in for short-term and long-term benefits. 

You can buy and sell shares of these funds at your convenience. The inherent liquidity and frequent market swings can provide plenty of opportunities to earn a regular income from your investments.   

Before investing in bond funds, be sure to evaluate certain factors that can impact your earnings. These factors can include expense ratios, price-to-earnings (P/E) ratios, liquidity, assets under management (AUM) and return rate. 

You can consider investing in these top of these funds to grow your wealth. 

1. Invesco WilderHill Clean Energy ETF (NYSEARCA: PBW)

Invesco WilderHill Clean Energy ETF has been open to trade since 2005. It is composed of U.S. companies that are dedicated to the advancement of cleaner energy and conservation. This ETF tracks the WilderHill Clean Energy Index. Its holding companies are a blend of small-cap, mid-cap and large-cap companies from industrial sectors such as information technology, consumer discretionary, materials, utilities and energy.  

PBW has a 0.7% expense ratio, a yearly range of $24.26 to $138.60 and trades 1.04 million shares daily. It pays a dividend yield of 0.42%, has a 1-year return of 189.89%, a 3-year return of 66.56% and a 5-year return of 42.05%.

Historical performance of Invesco WilderHill Clean Energy ETF in the past 5 years.

2. ARK Genomic Revolution ETF (BATS: ARKG)

ARK Genomic Revolution ETF has been listed on the stock exchange since 2014. It concentrates on multi-cap U.S. companies from industrial sectors such as healthcare, energy, automation, manufacturing, materials and transportation. These companies include Invitae Corp., CRISPR Therapeutics AG, Pacific Biosciences of California, Inc., CareDx Inc. and Lovance Biotherapeutics Inc.  

This ETF has an expense ratio of 0.75%. It has a 52-week low of $24 and a 52-week high of $77.48. ARK Genomic Revolution ETF has an annual dividend yield of $2.11 per share. It has AUM of $3,133 million and has high liquidity with an average daily trade volume of 436,083 shares. This ETF has a 1-year return rate of 149.55%, a 3-year return rate of 219.49% and a 5-year return rate of 290.10%. 

Historical performance of ARK Genomic Revolution ETF in the past 5 years.

3. ProShares UltraPro QQQ (NASDAQ: TQQQ)

ProShares UltraPro QQQ ETF was launched in 2010. It tracks the NASDAQ-100 index at a 3x return rate. This ETF has holdings in large-cap U.S. companies such as Apple, Microsoft, Amazon.com, Facebook and Alphabet. ProShares UltraPro QQQ ETF is more suited for short-term investors. The leverage on this ETF is reset daily and its compounding return rate can differ drastically compared to non-leveraged ETFs.

The expense ratio of this ETF is 0.95%. It has an annual dividend yield of $0.03 per share. ProShares UltraPro QQQ ETF has high liquidity and trades over 12 million shares per day. It has an AUM of $8,877 million and a 1-year return rate of 94.15%, a 3-year return rate of 222.58% and a 5-year return rate of 622.54%. This ETF has a 52-week low of $32.27 and a 52-week high of $175.67. 

Historical performance of ProShares UltraPro QQQ in the past 5 years

4. ARK Next Generation Internet ETF (NYSEARCA: ARKW)

ARK Next Generation Internet ETF was founded in 2014. It focuses on U.S. companies that are engaged in cloud computing, mobile networks, artificial intelligence (AI), Internet of Things (IoT) and blockchain. Its asset holdings include large-cap companies such as Tesla, Roku, Square, Spotify and Pure Storage. 

This ETF has an expense ratio of 0.76% and has a P/E ratio of 48.29. ARK Next Generation Internet ETF has a 1-year return rate of 119.81%, a 3-year return rate of 206.17% and a 5-year return rate of 466.58%. It has AUM of $3,152 million and trades more than 587,754 shares per day. ARK Next Generation Internet ETF has a 52-week low of $40.49 and a 52-week high of $127.59.

Historical performance of ARK Next Generation Internet ETF in the past 5 years

5. Direxion Daily Technology Bull 3X Shares (NYSEARCA: TECL)

Direxion Daily Technology Bull 3X Shares ETF has been on the market since 2008. This ETF tracks the Technology Select Sector Index at a 3x return rate. Its asset holdings consist of large-cap U.S. companies such as Apple, Microsoft, NVIDIA, Visa and Mastercard. Short-term investors are more likely to profit from this ETF as its leverage is reset on a daily basis. 

The expense ratio of this ETF is 1.08% and its P/E ratio is 31.17. It has an annual dividend yield of $0.31 per share. Direxion Daily Technology Bull 3X Shares ETF has a 52-week low of $73.98 and a 52-week high of $336.30. It has high liquidity and trades more than 219,924 shares per day. This ETF has a 1-year return rate of 63.73%, a 3-year return rate of 203.49% and a 5-year return rate of 768.07%. Direxion Daily Technology Bull 3X Shares ETF has AUM of $ 1,903 million.

Historical performance of Direxion Daily Technology Bull 3X Shares ETF in the past 5 years.

Best Online Brokers for Bond Funds

An online broker enables you to browse through thousands of bond mutual funds and ETFs. These platforms let you buy and sell shares hassle-free. Most online brokers also let you trade these funds free of commission. As you look at a savings bond, you want to know that, as a bondholder, you have more options than just municipals. Plus, a bond investor wants to use a broker that offers quality customer service.

You can access historical financial information on stocks and bonds on these platforms. It also lets you manage your portfolio and provides insights for making the right investment decisions.

You can also work with a portfolio manager who will help you find fixed income funds that will make your investment portfolio more robust. Market conditions could change at any time, but the bonds you have bought will tend to perform well. Remember, though, that interest payments are not guaranteed to remain the same.

Take a look at these online brokers to invest in bonds and begin collecting those interest payments.

Advantages of Bond Funds

Here’s why investing in these funds can be beneficial to your portfolio. 

• There are hundreds of bond funds backed by government bonds that have limited stock price volatility. These funds can be a profitable fit for investors with a low-risk profile. 

• Bond funds such as mutual funds and ETFs offer instant diversification. You can capture a large chunk of the market with a single trade. 

• Bond funds are regularly monitored by fund managers. As a result, these funds are better investment options for passive traders. 

• Many bond funds can be traded at expense ratios below 1%. The low-cost of buying bonds make it affordable for new investors.

• Bond funds reward their shareholders with regular payments as dividends. These dividends are issued monthly, quarterly or annually, making it a reliable source of income.   

Disadvantages of Bond Funds

Although there are several advantages of investing in these funds, it does not make it less risky. Here’s why investing in bond funds may not be the best financial decision for you. 

•  Low-risk bond funds come at the cost of low returns. 

• Earnings from these funds can have a comparatively higher tax rate. The increased tax margins can significantly decrease profits from your trades.  

• Bond funds are directly affected by credit interest rates. An increase in credit interest rate can decrease the price of individual bonds. Bond funds with longer maturity durations are prone to inflation.   

Build a Better Portfolio with Bond Funds

Investing in these funds can broaden the horizons of your portfolio at a margin of the cost. Based on your trading tactics, bond funds also offer investors a mix of multi-cap companies from various industrial verticals to invest in.    

You can start with traditional paper savings bonds, move into other revenue bond options, secure a quality bond price and build your portfolio. Don’t forget to diversify and research the bond market as much as you can with help from Benzinga.

Frequently Asked Questions