A pair of exchange-traded bond funds popped Wednesday as investors flee stocks in search of safety. The Vanguard Total Bond ETF (BND) and the iShares Core U.S. Aggregate Bond ETF (AGG) each leapt by as much as 1.4% Wednesday morning. The funds are having their best day since Nov. 10. Both are up about 2.5% this year. Gains in these funds coincide with a sharp sell-off in stocks amid global fears around the banking sector with Credit Suisse shares plummeting to begin the day. Investors sought safety in Treasurys , with yields dropping as traders bought up the issues. BND AGG YTD line Year to date performances for BND and AGG At a time when credit quality is front-of-mind for investors, BND and AGG both offer broad exposure to U.S. investment grade bonds, but U.S. Treasurys and other government bonds account for the largest share of holdings in both ETFs. Just over 67% of the assets in the BND portfolio have a credit rating that’s deemed “U.S. government,” meaning that these include Treasurys, U.S. agency issues and U.S. agency mortgage backed-securities. Meanwhile, Treasurys make up 41% of the holdings in AGG, followed by issues from the Federal National Mortgage Association and the Government National Mortgage Association — known as Fannie Mae and Ginnie Mae. Corporate issues in BND include Amazon , AbbVie and Alphabet , while AGG holds bonds from Morgan Stanley , Bank of America and JPMorgan Chase . — CNBC’s Gina Francolla contributed to this report.
