BIV ETF

With a steepening yield curve and rate cut expectations looming, the environment for the bond market can be a tricky one to navigate. That said, here are three bond funds from Vanguard to consider.

If you're retired and trying to keep your life as simple as possible, consider a foundational investment in these two income ETFs.

The yield curve is starting to steepen again, giving fixed income investors an opportunity to consider long-term debt again. However, if the risk of stepping too far out into the yield curve is too much to bear, consider using intermediate bond options.

The question of whether the economy is in a recession or not, a forthcoming presidential election, and interest rates add to the high level of uncertainty in the current market. As such, fixed income investors may want to take a middle-ground approach with bonds and opt for debt with intermediate maturity dates.

BIV is an index fund tracking intermediate term bonds with a moderate duration exposure, high quality portfolio, and low expense ratio. BIV shares have declined by nearly 12% since January 2022. Corporate bond yields are at their highest in over a decade and the interest rate cycle has likely peaked, providing a brighter outlook for BIV and similar funds.

With a forthcoming election paired with the expectation of rate cuts, the bond market could see volatility in the second half of 2024. That said, investors may want to opt for a middle-ground solution for yield and rate risk with intermediate-term bond funds.

Data from a Morningstar report noted that May saw strong inflows for taxable bond funds, confirming the broader trend of bond funds seeing heightened interest within the past year.

For investment-grade bond funds, fixed income investors may need to examine the holdings closely to determine if they are truly investment-grade. Vanguard offers three ETFs that meet this standard.

Investors appear to be taking a Goldilocks-like approach to bonds — not too short and not too long. According to a Reuters report, investors have been opting for intermediate term-bonds funds of the Treasury variety as uncertainty over the U.S. Federal Reserve's policy looms.