Quick Verdict
- Our Rating: ★★★★½ (4.5/5)
- Best For: Long-term investors who want a diversified, investment-grade core bond holding at minimal cost
- Not Ideal For: Investors seeking high yield, inflation protection, or protection from interest-rate swings
- Expense Ratio: 0.03%
- Our Take: BND offers broad U.S. investment-grade bond exposure for a very low fee, with only 3.95% of assets in its ten largest holdings. Its 5.7-year average duration means it remains sensitive to interest rates, as its negative one-year and five-year returns show.
Table of Contents
What Is the Vanguard Total Bond Market ETF (BND)?
What is BND ETF? The Vanguard Total Bond Market ETF is an exchange-traded fund that gives investors exposure to the U.S. investment-grade bond market through a single ticker. Vanguard launched it on April 3, 2007. It tracks the Bloomberg US Aggregate Float Adjusted Index, a market-weighted benchmark that covers Treasuries, government agencies, mortgage-backed securities, and investment-grade corporate bonds.
The fund holds 11,434 bonds, with an average duration of 5.7 years and an average credit quality of AA. The ETF is a share class of an open-end fund. It holds $161.4 billion in assets, and all share classes combined total $389.3 billion. It charges a 0.03% expense ratio and pays distributions monthly, which is why it is a common core holding in diversified portfolios.
BND ETF Key Facts
| Item | Detail |
|---|---|
| Full name | Vanguard Total Bond Market ETF |
| Ticker | BND |
| Issuer | Vanguard |
| Index | Bloomberg US Aggregate Float Adjusted Index |
| Inception date | Apr 3, 2007 |
| Expense ratio | 0.03% |
| AUM | $161.4 billion |
| Average volume | ~10.0 million shares/day |
| Dividend yield | 4.17% (12-month trailing) |
| SEC yield | 5.12% |
| Dividend frequency | Monthly |
| Structure | Open-end fund |
| Holdings / duration / credit quality | 11,434 / 5.7 years / AA |
BND ETF Performance
As of October 2026, BND’s trailing returns were mixed. The fund posted -1.82% over one year, delivered +4.04% annualized over three years, returned -0.64% annualized over five years, and has returned +1.13% annualized over ten years.
| Period | BND | Benchmark |
|---|---|---|
| 1-Year | -1.82% | -1.8% |
| 3-Year (annualized) | +4.04% | +4.0% |
| 5-Year (annualized) | -0.64% | -0.6% |
| 10-Year (annualized) | +1.13% | +1.2% |
The Bloomberg US Aggregate Float Adjusted Index posted nearly identical figures. The gap between fund and index stayed within about 0.1 percentage points in every window. That is consistent with the 0.03% expense ratio and with Vanguard holding a representative sample of the index rather than every bond. The benchmark figures are rounded to one decimal, so the exact tracking difference may vary slightly.
Intermediate-duration bond funds tend to lose value when yields rise, and the negative one-year and five-year figures show how that sensitivity has appeared in the data. Longer windows were less negative, though the 10-year annualized return of 1.13% was well below the fund’s current SEC yield. Past performance is not a guarantee of future results, and these numbers describe history only.
BND Top Holdings and Sector Breakdown
| # | Holding | Weight |
|---|---|---|
| 1 | US Treasury Note 4.25% (Nov 15, 2034) | 0.41% |
| 2 | US Treasury Note 4.38% (May 15, 2034) | 0.41% |
| 3 | US Treasury Note 4.63% (Feb 15, 2035) | 0.41% |
| 4 | US Treasury Note 3.88% (Aug 15, 2034) | 0.41% |
| 5 | US Treasury Note 3.50% (Jan 31, 2028) | 0.40% |
| 6 | US Treasury Note 4.00% (Feb 15, 2034) | 0.40% |
| 7 | US Treasury Note 4.13% (Feb 15, 2036) | 0.39% |
| 8 | US Treasury Note 4.25% (Aug 15, 2035) | 0.38% |
| 9 | US Treasury Note 4.50% (Nov 15, 2033) | 0.38% |
| 10 | US Treasury Note 4.25% (May 15, 2035) | 0.36% |
| Sector | Weight |
|---|---|
| US Treasuries/Agency | 49.4% |
| Corporate | 25.5% |
| Mortgage-backed (Government) | 19.1% |
| Other | 5.9% |
BND is market-value weighted. Each bond’s weight reflects its size in the float-adjusted index, which accounts for bonds held by the Federal Reserve rather than available to public investors. The ten largest positions are all Treasury notes and add up to about 3.95% of assets, so single-security concentration is very low. Nearly half the portfolio sits in Treasuries and agencies, which helps explain the AA average credit quality. Corporate bonds make up roughly a quarter of assets and carry the main credit risk.
BND ETF Pros and Cons
Pros
- Very low cost: The 0.03% expense ratio equals about $3 a year per $10,000 invested.
- Broad diversification: With 11,434 holdings and a top-10 weight near 3.95%, no single bond drives results.
- High credit quality: An average rating of AA and roughly half the fund in Treasuries and agencies limit default risk.
- Income: Monthly distributions, a 4.17% trailing yield, and a 5.12% 30-day SEC yield. These measure different periods, so they differ.
- Scale and liquidity: About 10 million shares trade daily, and $161.4 billion sits in the ETF share class.
Cons
- Interest-rate sensitivity: A 5.7-year duration means prices can fall when yields rise, as the -1.82% one-year return shows.
- Weak long-run returns: Five-year returns were negative, and 10-year returns were only +1.13% annualized.
- Limited scope: The fund holds no high-yield, international, or inflation-linked bonds.
- Yield is not return: Distributions can be offset by price declines.
Who Should Invest in BND?
Is BND a good investment? That depends on goals, time horizon, and risk tolerance.
BND may be a good fit if you:
- Want a simple, low-cost core bond holding to balance a stock-heavy portfolio.
- Prefer investment-grade credit quality over higher-yielding, riskier bonds.
- Value monthly income and can tolerate temporary price swings.
- Are building a diversified portfolio and want U.S. bond market exposure in one fund.
- Can hold for several years, which gives interest income time to offset price changes.
BND may not be ideal if you:
- Need guaranteed principal or a fixed payout at a set date.
- Expect to need the money soon, since bond prices can fall before then.
- Want inflation protection, high yield, or international bonds from a single holding.
- Are looking mainly for capital growth rather than income and diversification.
BND Alternatives
| ETF | Expense Ratio | AUM | Key Difference |
|---|---|---|---|
| AGG (iShares Core U.S. Aggregate Bond ETF) | 0.03% | ~$135 billion | Standard (non-float-adjusted) Bloomberg US Aggregate; launched 2003 |
| SCHZ (Schwab U.S. Aggregate Bond ETF) | 0.03% | ~$10.6 billion | Similar benchmark, much smaller fund |
| IUSB (iShares Core Total USD Bond Market ETF) | 0.06% | ~$43 billion | Tracks Bloomberg US Universal; adds high-yield and USD emerging-market bonds |
AGG is BND’s closest rival: same fee and similar holdings, though it tracks the standard rather than float-adjusted index. SCHZ also charges 0.03% and suits investors who prefer Schwab’s platform, but its smaller asset base is a consideration. IUSB costs twice as much and carries more credit risk because it can hold non-investment-grade bonds, which may appeal to investors seeking extra yield.
Related reading: [Best Bond ETFs] | AGG ETF Review | SCHZ ETF Review | How to Read an ETF Expense Ratio
Frequently Asked Questions
Is BND a good long-term investment?
BND may suit long-term investors seeking diversified, low-cost bond exposure. Its 10-year annualized return of +1.13% shows that returns have been modest, so it is typically used for stability and income rather than growth. Whether it fits depends on your goals and risk tolerance.
How often does BND pay dividends?
BND pays distributions monthly. Its trailing 12-month dividend yield was 4.17%, while the 30-day SEC yield was 5.12% as of Oct 21, 2026. The two figures use different methods and periods, and distribution amounts can change from month to month.
What is the difference between BND and AGG?
Both charge 0.03% and cover the U.S. investment-grade bond market. BND tracks the float-adjusted version of the Bloomberg US Aggregate Index, while AGG tracks the standard version. AGG has a longer history, having launched in 2003, and both funds are very large and liquid.
Can I lose money investing in BND?
Yes. BND returned -1.82% over one year and -0.64% annualized over five years. Bond prices generally move opposite to interest rates, and corporate holdings carry credit risk. Interest payments can offset losses, but not always.
How do interest rates affect BND?
With an average duration of 5.7 years, a rule of thumb is that a one-percentage-point rise in yields lowers the price by roughly 5.7%, all else equal, and a fall in yields raises it by a similar amount. Interest income partly cushions the effect over time.
Data as of October 2026. Sources: issuer websites and finance.yahoo.com.
Disclaimer: The information in this article is for educational and informational purposes only. It does not constitute financial, investment, or tax advice. Past performance is not indicative of future results. Investing in ETFs involves risk, including possible loss of principal. Always consult a qualified financial advisor before making investment decisions.