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Welcome to the new RBC iShares digital experience.

Find all things ETFs here: investment strategies, products, insights and more.

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Key takeaways

  • Bond ETFs can simplify investing, giving you exposure to hundreds of bonds with just one trade.
  • Bond ETFs can provide income, giving you the option to receive frequent interest payments.
  • Bond ETFs are liquid, giving you the flexibility to buy and sell when you need to.

What is a bond ETF?

Bond ETFs can also be called fixed income ETFs. They are funds that invest in a basket of bonds. Some bond ETFs provide exposure to broad markets such as the Canadian bond market or global bond markets. Other bond ETFs might target specific markets, such as Canadian short-term corporate bonds, U.S. high yield bonds or emerging market bonds. There are bond ETFs that track an index and there are ones that are actively managed.

Individual bonds are traded over the counter (OTC). The OTC market consists of hundreds of financial institutions and brokerages that buy and sell bonds. Bond ETFs, like stocks, are traded on exchanges such as the Toronto Stock Exchange.  This means you can buy and sell bond ETFs throughout the day as prices change. 

what are bond etfs

Investors use bond ETFs for a variety of reasons. Examples include:

  • To diversify their equity portfolio: Bond prices have tended to move independently of stocks.¹ So, adding bond ETFs to a portfolio of equities may help achieve a more balanced portfolio and provide risk mitigation if stocks sell off.
  • As a source of income: Bond ETFs can be a source of higher income compared with bank saving accounts and GICs, especially in a low interest rate environment.
  • Portfolio stability: Some bond ETFs can help provide more stable and consistent returns across different market conditions.

What are the benefits of buying bond ETFs vs. individual bonds

  1. They can simplify investing. Building and monitoring a portfolio of multiple bond holdings of different types and maturity dates can be challenging for investors. It can also be time consuming as each bond must be traded separately. A bond ETF can manage a basket of bonds for you. The fund manager takes care of selecting, trading and rebalancing the fund for a low yearly management fee.
  1. They can reduce investment risk. Bond ETFs typically hold a diversified basket of bonds. For example, one of the oldest bond ETF in Canada, iShares Core Canadian Universe Bond Index ETF (XBB), holds more than 1,000 bonds. Holding multiple bonds can help you diversify your fixed income portfolio, which can reduce investment risk.
  1. They can improve cash flow. One of the benefits of owning bonds is the chance to receive income through interest payments (called a ‘coupon’). For individual bonds, you usually receive coupons every six months. Bond ETFs, in contrast, usually pay interest monthly. The more frequent payments may be preferred by investors who need a regular income stream.

Ask your advisor if bond ETFs may be right for you or explore more ideas on how to use ETFs in your portfolio.

1. Based on 10-year weekly return correlation of 13% between Canadian equity (S&P/TSX Composite Index) and Canadian bonds (FTSE Canada Universe Bond Index). Source: Morningstar. Data as of July 26, 2025.

How can we help?

The RBC iShares alliance offers an unparalleled breadth of ETF solutions, a commitment to exceptional service and top investment expertise located around the world.

Advisors: Contact your dedicated sales team and access portfolio resources – Login here.

Investors: Contact your financial advisor to discuss which investments may be right for you.

Disclosure

Last reviewed: August 6, 2025

Investing involves risk, including possible loss of principal.


RBC iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset Management Inc. and iShares ETFs managed by BlackRock Asset Management Canada Limited ("BlackRock Canada").


Commissions, trailing commissions, management fees and expenses all may be associated with investing in exchange-traded funds (ETFs). Please read the relevant prospectus or ETF Facts document before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.


The iShares ETFs are not connected, sponsored, endorsed, issued, sold or promoted by Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services, Limited (“Bloomberg”), Cohen & Steers Capital Management Inc., London Stock Exchange Group plc and its group undertakings (“LSE Group”, ICE Data Indices, LLC., ICE Benchmark Administration Limited, Jantzi Research Inc., Markit Indices Limited, Morningstar, Inc., MSCI Inc., MSCI ESG Research and Bloomberg, NASDAQ OMX Group Inc., NYSE FactSet or S&P Dow Jones Indices LLC. (“S&P”). None of these companies make any representation regarding the advisability of investing in the iShares ETFs. BlackRock Asset Management Canada Limited is not affiliated with the companies listed above.


The Prospectus contains a more detailed description of the limited relationship the companies have with BlackRock Asset Management Canada Limited and any related ETFs.


® / TM Trademark(s) of Royal Bank of Canada. Used under licence. iSHARES is a registered trademark of BlackRock, Inc., or its affiliates. Used under licence. © 2025 BlackRock Asset Management Canada Limited and RBC Global Asset Management Inc. All rights reserved.


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Benefits of a bond ETF | RBC iShares

What is a bond ETF?


What is a bond ETF?