Bond Ladder

Conservative Income

A diversified bond portfolio spanning the yield curve. Short-term for safety, intermediate for yield, and a slice of corporates for extra income. The boring but effective fixed-income allocation.

5
ETFs
3.8%
Aggregate Yield
$63.1B
Wtd Avg AUM

Holdings

Symbol Name Weight Price 1D 3M YTD Yield AUM
SHV iShares Trust iShares 0-1 Year Treasury Bond ETF 20% $110.19 ... ... ... 3.2% $21.2B
IEF iShares 7-10 Year Treasury Bond ETF 25% $95.29 ... ... ... 3.2% $49.0B
TLT iShares 20+ Year Treasury Bond ETF 15% $86.50 ... ... ... 3.8% $42.2B
VCIT Vanguard Intermediate-Term Corporate Bond ETF 20% $82.95 ... ... ... 4.0% $64.4B
AGG iShares Core U.S. Aggregate Bond ETF 20% $99.34 ... ... ... 3.3% $137.3B

Investment Thesis

A bond ladder spreads investments across different maturities so that bonds are always maturing and being reinvested, regardless of the interest rate environment. If rates rise, maturing short-term bonds get reinvested at higher rates. If rates fall, the longer-duration bonds appreciate in price. This ETF-based ladder achieves the same effect: SHV covers the short end (0-1 years), IEF the intermediate range (7-10 years), TLT the long end (20+ years), and VCIT and AGG fill in the middle with corporate and aggregate exposure. The result is a portfolio with moderate duration, multiple income sources, and natural rebalancing as rates move. The ~3.8% yield significantly exceeds money market rates while maintaining capital stability. This is ideal for the fixed-income portion of a larger portfolio or for investors who can't tolerate equity volatility at all.

Portfolio Construction

SHV iShares Trust iShares 0-1 Year Treasury Bond ETF
20%
Ultra-short treasuries — near-cash safety. Bills maturing in 0-12 months with virtually no price risk. Provides a stable base and liquidity for the portfolio.
Yield: 3.2% AUM: $21.2B
IEF iShares 7-10 Year Treasury Bond ETF
25%
7-10 year treasuries — the sweet spot of the yield curve. Moderate duration provides meaningful yield without excessive interest rate sensitivity. The core of any bond allocation.
Yield: 3.2% AUM: $49.0B
TLT iShares 20+ Year Treasury Bond ETF
15%
20+ year treasuries for rate decline upside — the longest duration allocation. If rates fall 1%, TLT could appreciate 15%+. Provides portfolio insurance against deflation and economic weakness.
Yield: 3.8% AUM: $42.2B
VCIT Vanguard Intermediate-Term Corporate Bond ETF
20%
Investment-grade corporates for yield — bonds from the strongest US companies, paying a spread above treasuries. Yields roughly 1% more than equivalent treasuries with modest credit risk.
Yield: 4.0% AUM: $64.4B
AGG iShares Core U.S. Aggregate Bond ETF
20%
Aggregate bond index for broad exposure — the total US bond market in one fund. Government, corporate, and mortgage-backed bonds in market-cap weights. The benchmark against which all bond portfolios are measured.
Yield: 3.3% AUM: $137.3B

Key Considerations

  • Rising rates will cause temporary price declines, especially in TLT
  • Credit spreads can widen during recessions, hurting corporate bond prices
  • Real returns (after inflation) may be negative if inflation exceeds yields
  • No equity exposure means no participation in stock market gains
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