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Definition of 'Bond ETF'
A type of exchange-traded fund (ETF) that exclusively invests in bonds. Bond ETFs are very much like bond mutual funds in that they hold a portfolio of bonds and can differ widely in strategies, ranging from U.S. Treasuries to high yields, from long-term to short-term. Bond ETFs trade like stocks and are passively managed.
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Investopedia explains 'Bond ETF'
A bond ETF trades throughout the day and is therefore more liquid than a mutual fund, which only trades at one price a day according to its net asset value. The drawback to this is that a broker fee is incurred when trading in an ETF, much like when trading a stock.
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This vehicle combines the diversification of a mutual fund with the flexibility of a stock. Learn more about them here.
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Minimizing risk while maximizing return is any investor's prime goal. The right mix of securities is the key to achieving it.
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Get into ETFs and enjoy the benefits of a mutual fund with the flexibility of a stock.
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If you are investing small amounts regularly into an exchange-traded fund, be sure to do it right.
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To take full advantage of these vehicles, you need to know how they can fulfill certain strategies.
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