Best Performing Fixed Income ETFs Of The Year

It’s been a tough year to be a fixed income investor. The $82 billion iShares Core U.S. Aggregate Bond ETF (AGG) is down by nearly 10% in 2022, putting it on track for its worst year ever. Like AGG, most fixed income ETFs are down significantly. 

Excluding leveraged products, there are about a dozen fixed income ETFs that are up on a year-to-date basis. Most of these funds use shorts, put options or similar strategies, which enables them to go up when bond prices go down (and rates rise). 

For example, the Simplify Interest Rate Hedge ETF (PFIX) is designed “to be functionally similar to owning a position in long-dated put options on 20-year US Treasury bonds.” It’s up 57.5% this year. 

The FolioBeyond Rising Rates ETF (RISR) holds U.S. Treasurys and interest-only mortgage-backed securities. The MBS IOs portion of the portfolio has benefited from rising rates, propelling the fund to a 31.3% gain in 2022. 

Some of the more conventional bond ETFs have also managed to eke out gains this year. The WisdomTree Floating Rate Treasury Fund (USFR) is up 0.42% year –to date. The floating rate notes that USFR holds have little interest rate risk, as their coupon payments are reset periodically to match prevailing market rates.  

Similarly, ultra-short maturity bond ETFs, like the Clearshares Ultra-Short Maturity ETF (OPER), have little interest rate risk because they get paid back so quickly. OPER is up 0.15% this year. 

For a full list of this year’s top-performing fixed income ETFs, see the table below: 

Best-Performing Fixed Income ETFs Of The Year (ex. leveraged ETFs)

Note: Data measures total returns for the year-to-date period through May 13, 2022. 

Follow Sumit on Twitter @sumitroy2