Worst Performing Fixed Income ETFs

May 30, 2019

Earlier this month, ETF.com took a look at best-performing fixed income ETFs of the year. That list was chock full of funds tied to hybrid securities like preferred stocks and convertible bonds, but also included high yield bond ETFs and even investment grade bond ETFs.

Indeed, it’s been hard to go wrong with any fixed income ETF this year, as interest rates have tumbled to multimonth lows on the back of concerns about the trade war and the general health of the global economy.

Still, as is always the case, even within an outperforming asset class, some ETFs do better than others. We’ve already taken a look at the best of the bunch; today, we take a look at the other side of the ledger.

Worst Performers, Not Poor Performers

Unlike with other asset classes, when it comes to fixed income, being on the worst-performers list doesn’t necessarily mean a fund is doing poorly.

Sure, there are inverse bond ETFs that bet against things like the surging 30-year Treasury, which are getting hammered this year. The iPath US Treasury Long Bond Bear ETN (DLBS) is down 17.1% this year, an unequivocally bad return. But strip out the inverse and leveraged products, and the results are much more benign.

The resulting list includes funds, such as low duration ETFs, that by design aren’t going to offer much in the way of yield or fluctuate all that much, regardless of what interest rates do (albeit, low duration funds do tend to underperform during periods, like 2019, when interest rates are falling).

Underperformance in fixed income is, of course, a relative thing. Among the 15 worst-performing ETFs in the space, only two actually have negative returns; the rest have returns between 0.4% and 1%.

US Dollar Weighs On Int’l Bond Returns

The only two fixed income ETFs with negative year to date returns are international funds—the iShares 1-3 Year International Treasury Bond ETF (ISHG) and the SPDR Bloomberg Barclays Short Term International Treasury Bond ETF (BWZ)—with losses of 1.4% and 0.4%, respectively.


Worst-Performing Fixed Income ETFs (excluding leveraged/inverse)

Ticker Fund YTD Return (%)
ISHG  iShares 1-3 Year International Treasury Bond ETF -1.40
BWZ SPDR Bloomberg Barclays Short Term International Treasury Bo… -0.38
PVI Invesco VRDO Tax-Free Weekly ETF 0.43
FUMB  First Trust Ultra Short Duration Municipal ETF 0.50
LEMB  iShares J.P. Morgan EM Local Currency Bond ETF 0.63
FTSD Franklin Liberty Short Duration U.S. Government ETF 0.63
IBMH iShares iBonds Sep 2019 Term Muni Bond ETF 0.63
IBND  SPDR Bloomberg Barclays International Corporate Bond ETF 0.85
MEAR  iShares Short Maturity Municipal Bond ETF 0.85
JMST  JPMorgan Ultra-Short Municipal Income ETF 0.86
KCNY  KraneShares E Fund China Commercial Paper ETF 0.87
BIL  SPDR Bloomberg Barclays 1-3 Month T-Bill ETF 0.90
OPER  ClearShares Ultra-Short Maturity ETF 0.92
TFLO  iShares Treasury Floating Rate Bond ETF 0.92
IBMI  iShares iBonds Sep 2020 Term Muni Bond ETF 0.94

Data measures total returns for the year to date period through May 24

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