Retirees Are Quietly Rotating Into These 3 Bond ETFs Before the Rate Cut

With President Trump back in the White House steering us through tariff talks and economic shifts in March 2026, the reality is that the fixed income world has plenty to consider. The ongoing (and increasing) geopolitical conflicts around the world have raised the price of oil, which have also raised inflation expectations. On the other hand, the job market appears to be weakening, creating a situation in which some investors may be looking at investing in fixed income assets like bonds right now. 

Accordingly, I’d argue it’s probably harder than it’s been in some time to be a fixed income investor. But for those with a penchant for some relative portfolio security (and the income that comes with owning bonds), here are three great options to consider in one’s portfolio. These funds can not only help an individual investor balance out their portfolio risk levels, but provide upside if we do see recessionary forces take over. 

Vanguard total Bond Market ETF (BND)

The Vanguard Total Bond Market ETF (BND) is a top option for investors seeking stability in a world of choppiness (at least in the equity and crypto sectors). With investment-grade holdings in a range of bond offerings, BND is among the top-shelf options I think investors may want to consider to balance out long-term growth bets. 

Tracking the Bloomberg U.S. Aggregate Float Adjusted Index, BND holds more than 10,000 bonds including Treasuries (at a weighting of approximately 40%), mortgage-backed securities (roughly 30%), and investment-grade corporates and other bonds at smaller percentages. Notably, I think this fund is among the most fundamentally-sound of its peers, with its assets under management (more than $100 million) speaking to this trend. At an effective duration of about 6 years, and a 30-day SEC yield around 4.3%, I think that as the jobs market continues to weaken and more interest rate cuts come in from the Federal Reserve, this could be the bond ETF to own. 

I think this ETF’s one-stop diversification provides solid portfolio ballast without a credit risk overload. Thus, for those looking for manageable yields (around 3.8%), I think BND’s overall expense ratio of nearly 0.4% makes sense. Again, this is a personal choice, but one I think is worth at least considering. 

iShares 7-10 Year Treasury Bond ETF (IEF)

One to bond ETF I haven’t discussed thus far, but has come across my radar screen of late, is the iShares 7-10 Year Treasury Bond ETF (IEF). 

This fund delivers pure intermediate Treasury exposure, capitalizing on rate declines for price appreciation and reliable income. Mirroring the ICE U.S. Treasury 7-10 Year Bond Index, IEF invests entirely in U.S. government debt with maturities in what I think is a sweet spot. Targeting the so-called “belly of the curve” (bonds with 7-10 year durations), investors don’t have to take on too much in the way of interest rate or duration risk, while also achieving some of the best overall yields in the market. 

With yields rising of late, I think locking in some of these yields by adding some exposure to IEF right now makes sense. And unlike the aforementioned pick, IEF carries a very low expense ratio of just 0.15%. That’s while providing investors with a juicy dividend yield above 3.7%.

In terms of a balance of risks, this would be among my preferable ways to play the bond market right now. 

iShares MBS ETF (MBB)

Finally, we come to the iShares MBS ETF (MBB). This ETF provides high-quality mortgage-backed securities for juicy yields and monthly cash flow. Thus, for investors looking to capitalize on what could be a boon in the mortgage bond market (given the Trump administration’s announcement that it will be directing government-sponsored entities to buy back $200 billion in mortgage backed securities), this is a fund that could really benefit in the near-term.

Now, we don’t know how these purchases will be rolled out, and over what time frame. That’s a concern for some. And given how high interest rates are right now, some investors may be concerned about the quality of the underlying collateral (higher interest mortgages) held by so many Americans which could have their jobs impacted in this new world of AI. 

That said, for those thinking long-term, the housing market is one of the key wealth generators in the U.S. economy. I don’t expect that to change anytime soon. Thus, the 4.1% yield this fund provides at a microscopic 0.04% expense ratio looks pretty good to me right now.