Should I Buy Vanguard Total Bond Market Index Fund (BND)? Finance YouTuber Analysis

The YouTuber recommends BND for cash allocation, highlighting its broad diversification across the entire bond market (treasuries, short-term, long-term bonds) and a 3.8% dividend yield. He views it as a safe way to earn a better return than traditional savings.

“One step above that would be the Vanguard Total Bond Market Index Fund, the BND. Now, whereas that BSV that just invested in shorter term bonds, this total bond market, this invests in everything.”

The YouTuber advocates for BND as an essential component for portfolio safety and diversification, especially after a recent rally. He highlights its year-to-date outperformance against the S&P 500 and NASDAQ, its 3.6% dividend yield, and its broad exposure to over 10,000 US dollar-denominated bonds, comparing it to 'vegetables' for a healthy portfolio.

“Bonds are the veggies that help keep you healthy in any market.”

The analyst suggests this bond fund as a safety investment, holding a significant portion in US Government debt and highly-rated bonds. Its prices are expected to rise if interest rates come down in a weaker economic environment.

“another safety investment would be the Vanguard Total Bond market fund the ticker B and D which holds half of its Holdings in US Government debt the other half in highly rated bonds which going to see prices rise if those interest rates come down in the face of a weaker economy”

Despite bonds being 'total dog' recently, the YouTuber holds 10% of his money in BND, citing its 3.5% dividend and its role in protecting his portfolio. He also sees it as a source of ready cash to buy opportunities when stocks fall, given current stock valuations.

“holding some of my money in a bond ETF not only protects that part of my portfolio but also gives me ready cash to buy in on the opportunities when stocks fall”

The YouTuber presents BND as a good addition to a portfolio for safety and diversification outside of stocks, noting its resilience during market crashes. It invests in over 10,000 quality US dollar-denominated bonds, offering a 3.4% dividend yield, but it wouldn't be the only index fund due to its lack of growth potential from stocks.

“The Vanguard Total Bond Market Index ticker BND and before I get all kinds of hate comments about bonds being this year the BND is only down nine percent including the dividend so even in that sell-off on rates it has protected your money from a lot of the market crash.”

The YouTuber notes that BND, a total bond market ETF, has seen negative returns recently due to rising interest rates and has only modest long-term returns. He suggests that while it offers protection if stocks crash, it won't make investors rich and implies it's not an attractive investment in a rising rate environment.

“Now if we scroll down to this price chart negative 4.6 percent last year bonds sold off on higher interest rates and it was only 3.6 return over the past five years bonds and this bond fund are not going to make you rich but it will protect you if stocks crash.”