One of the most popular and cheap investment option available to retail investors looking to get bonds exposure are bonds ETFs. For a small AUM annual fee they allow investors to own a large basket of bonds from different issuers to reduce default risk. They can be classified into different categories depending on their characteristics. The most important categories are the following ones:
- Treasury vs corporate bonds: a treasury bond is a bond issued by a government or a bond backed by a government guarantee. On the other hand a corporate bond is a bond issued by a company.
- Short-term vs medium-term vs long-term bonds:
- The currency in which they’re issued: a country can issue a bond both in its original currency or in a different one.
- Developed countries vs emerging market bonds: