BND ETF

The stock market has been on a tear over the past couple of years. The S&P 500 is on track to deliver back-to-back years of more than 20% gains, while the tech-heavy Nasdaq-100 index has nearly doubled since the start of 2023.

Retirees could be in for tougher sledding going into 2025 as calls for lower prospective returns over the next year and decades grow louder.

Building a powerful investment portfolio doesn't require complex strategies or dozens of holdings. A straightforward approach using three exchange-traded funds (ETFs) can deliver remarkable results through market cycles.

With a new presidential administration slated to take office in 2025, fixed income investors may be feeling the angst of uncertainty when it comes to their bond portfolios. However, Vanguard sees the risk/return trade-off for bonds as favorable.

Fixed income investors already invested in bonds could see a holiday treat this year with a Christmas rally. For those still pondering the idea, now could be an ideal time for bond exposure.

On Thursday, Vanguard released two new active bond ETFs. These funds offer different perspectives in terms of municipal bond investing.

Emerging market (EM) assets are benefiting from a post-election rally as investors are now more clear on what the incoming presidential administration will look like. In the meantime, if emerging market assets continue trending higher, consider bond exposure.

Trump's Polymarket election odds have a 73% R-squared to the 10-year Treasury rate, indicating that a Trump win would lower high-duration bond prices. A Republican sweep of the House and Senate may exacerbate losses by making deficit spending policies more feasible. However, the same can be argued for a Democrat sweep. My long-term view on high-duration Treasury bonds is decidedly bearish, given the bipartisan consensus against fiscal responsibility and pro-inflationary Fed policies.

Recommend buying Vanguard Total Bond ETF due to exaggerated market hopes for deeper rate cuts, leading to recent bond underperformance. BND offers broad exposure to the American fixed income market, with over 11,000 bonds and a 0.03% management fee. Historical data shows bonds have returns over 10% during rate-cut cycles, making the Fund an attractive investment opportunity.