Investing Insights Bond ETFs Are Surging in Popularity in 2025. Here Are 5 of the Best
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Nov 14, 2025 
Dan Sotiroff, a senior manager research analyst at Morningstar Research Services and editor of the Morningstar ETFInvestor newsletter, dives into the booming world of bond ETFs in 2025. He explains why investors are flocking to these funds and compares the flows between passive and actively managed options. Sotiroff outlines four major types of bond ETFs and emphasizes the stability that core ETFs bring to portfolios. He highlights top picks like Vanguard's BND and Fidelity's Total Bond ETF, also discussing the trade-offs and risks associated with higher-yield bond ETFs.
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Passive Bond ETFs Lead Flows
- Passive bond ETFs currently capture slightly more flows than active, roughly a 60/40 split in favor of passive.
- Large, established passive funds (e.g., BND, AGG) anchor flows because investors use them as core holdings.
Four Building Blocks Of Bond ETFs
- Morningstar groups bond ETFs into four building blocks: core, core-plus, multisector, and high-yield, each rising in risk and yield.
- Core funds prioritize diversification and low volatility, while high-yield offers higher income with equity-like volatility.
Use Core Bonds As Portfolio Ballast
- Use core bond ETFs as portfolio ballast to diversify and lower overall volatility versus stocks.
- Choose a core allocation that matches your risk profile and consult an advisor if unsure.