Best ETFs For Trading: TIPS, Junk And Munis

ETFS

These 15 funds are the cheapest in their categories for short-term speculations. 

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Owning a bond fund is one way to bet on a decline in interest rates. The table ranks the cheapest exchange-traded funds for three-month holding costs on a $10,000 investment.

3-month Holding Cost*
Liquidity Score
Ticker Exchange-traded fund
Inflation-protected
STIP iShares 0-5 Year TIPS Bond $2.75 A
VTIP Vanguard Short-Term Infl-Prot Secs 3.59 A
SCHP Schwab US TIPS 3.60 A
TIP iShares TIPS Bond 5.97 A+
IPE SPDR Blmbg Barclays TIPS 7.01 B
TDTT FlexShares iBoxx 3Yr Target Dur TIPS 9.79 B
  Junk
HYGH iShares Interest Rate Hedged High Yield Bond 3.65 B
HYLB Xtrackers USD High Yield Corp Bd 6.53 A
SHYG iShares 0-5 Year High Yield Corp Bd 7.20 A
HYG iShares iBoxx $ High Yield Corporate Bond 9.94 A+
Tax-exempt
MUB iShares National Muni Bond 3.17 A
VTEB Vanguard Tax-Exempt Bond 4.28 A
SUB iShares Short-Term National Muni Bd 6.37 B
SHM SPDR Nuveen Blmbg Barclays ST MunBd 7.72 A
TFI SPDR Nuveen Blmbg Barclays Muni Bd 9.00 A

*Cost of a $10,000 position held for three months. Reflects bid/ask spread, expense ratio and cost offset from securities lending.

Data sources: Morningstar, Bloomberg, fund distributors

Bid/ask spreads figure heavily, and expense ratios not so heavily, in the cost calculation for speculative plays. For long-term investing the reverse is true, and different ETFs rise to the top in cost efficiency. For long-term cost rankings see Best ETFs: TIPS, Best ETFs: Junk Bonds, and Best ETFs: Tax-Exempt Bonds.

For links to the three-month cost rankings in other categories, see Best ETFs for Trading.

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