Top 6 ASX bond ETFs to watch in 2025

What are bond ETFs?

To understand what bond exchange-traded funds (ETFs) are, we must first look at what an ETF is.

It’s an investment instrument that tracks the performance of an existing market, like an index or a commodity.

Have a look at the video below to learn more. 

A bond ETF tracks government-issued bonds, like Australian bonds or US Treasuries, or corporate bonds.

What is the appeal of bond ETFs?

There are numerous reasons why someone might want to trade or invest in a bond ETF, such as:

• For share traders, they offer lower expense ratios than other investment products
• They’re easily accessible to traders because they’re traded on an exchange
• They provide good liquidity, transparency and often, diversification

According to Vanguard, the popularity of ETFs has exploded in the past few years, with many share traders looking for fixed-income opportunities in passive or active bond ETFs.¹

What are the different types of bond ETFs?

Some types of bond ETFs include:

• Treasury bond ETFs
• Corporate bond ETFs
• Junk bond ETFs
• International bond ETFs
• Leveraged bond ETFs

Of these, we have Treasury bond, international bond, corporate bond and leveraged bond ETFs on our list to watch in 2025.

Risks of bond ETFs

While bonds and bond ETFs have typically been seen as fairly safe investment vehicles, they aren’t without their perils.

Some provide plenty of volatility for CFD traders to find opportunities, and as such, aren’t suitable for long-term holding.

Others are leveraged, meaning they borrow funds to gain greater exposure. This can magnify profits but amplify losses just as easily. However, typically, share traders can’t lose more than their initial investment, as it’s the fund’s responsibility to take on the risk of leveraged losses. 

Top 3 bond ETFs for CFD traders to watch

Some bond ETFs are designed more for CFD traders looking to take positions intraday. The bond ETFs on this list present more opportunities for traders looking for short-term gains.

Overview of these shares

Of the bond ETFs on this list, you can trade the Betashares Geared Short Australian Government Bond Complex ETF and iShares 15+ Year Australian Government Bond ETF with us.

1. Betashares Geared Short Australian Government Bond Complex ETF (ASX: BBAB)
 

Exposure: Invests assets in cash and cash equivalents, and sells 10-year Australian Treasury Bond Futures

AUM: A$484,000²

BBAB is a geared bond ETF that gives traders an aggressive way to take short positions on Australian government bonds. Geared also means ‘leveraged’, wherein the ETF borrows funds to amplify profits or losses.

Put simply, where a traditional ETF will try to mimic an index, say, 1:1, a geared ETF will aim for 2:1 or even 3:1.

The fund is, therefore, structured using derivatives, so it doesn’t directly hold bonds. Instead, it tracks futures contracts and uses leverage to magnify exposure. This design makes it highly volatile compared with traditional bond ETFs.

While government bonds themselves are often perceived as ‘defensive,’ leveraged short exposure turns them into a high-risk trading instrument.

Because the fund is volatile, it is better for CFD traders than share traders – it’s made for short-term market movements and presents opportunities to trade intraday.

Highlights:

• Provides opportunities to CFD trade due to interest-rate expectations, Reserve Bank of Australia (RBA) decisions and macroeconomic data
• Not suitable for long-term share traders, as returns compound in unpredictable ways over weeks and months
• The fund is rebalanced to the mid-point when the gearing ratio levels are breached

2. Betashares Geared Short US Treasury Bond (Currency-Hedged) Complex ETF (ASX: BBFD)
 

Exposure: US 10-year Treasury bonds

AUM: A$1.05 million³

BBFD gives Australian traders geared short exposure to US 10-year Treasury bonds, the most-watched government security globally. It has a currency hedge in place to neutralise AUD/USD fluctuations.

This ETF enables local traders to speculate directly on moves in US yields without managing foreign exchange risk. For example, if US bond yields spike on hawkish Federal Reserve commentary, BBFD rises sharply. If yields fall, BBFD drops at a multiple of the move.

The appeal for CFD and short-term traders lies in the liquidity and volatility of US Treasuries. These bonds move daily in response to inflation prints, jobs data, Fed speeches and geopolitical developments. BBFD magnifies those moves, creating opportunities to take a position.

Highlights:

• Not intended for long-term buy-and-hold strategies. The geared structure resets daily, and compounding effects can erode performance over time if market conditions are choppy
• It’s a high-risk product that can generate outsized losses just as quickly as gains
• For traders, BBFD can serve as a tool to express a bearish view on US government debt or hedge portfolios exposed to interest-rate risk

3. iShares 15+ Year Australian Government Bond ETF (ASX: ALTB)
 

Exposure: Long-duration Australian government bonds, tracking an index of sovereign debt with maturities of at least 15 years

AUM: A$14.03 million⁴

ALTB focuses on long-duration Australian government bonds, tracking an index of sovereign debt with maturities of at least 15 years. Unlike geared funds, it doesn’t employ leverage,  but its long-duration profile naturally makes it more volatile than short- or intermediate-term bond ETFs.

Bond ‘duration’ measures sensitivity to interest-rate changes – the longer the maturity, the more price moves when rates shift. A 15+ year government bond, for example, can fall several percentage points in price with just a small rise in yields. ALTB bundles these into a single, tradable ETF.

Compared with geared ETFs, ALTB is less extreme, but still offers enough movement to interest active traders. Over short periods of market stress, long bonds can swing dramatically, meaning ALTB is far from a ‘steady income’ bond fund.

Highlights:

• ALTB sits between regular bond funds and geared products – volatile enough for tactical trades, but not as high-risk as geared ETFs
• Traders can take a position on expectations around the RBA’s policy moves, inflation and fiscal developments

Top 3 bond ETFs for share traders to watch

Many bond ETFs are designed to provide regular returns and lower-risk opportunities than other investment vehicles. These bond ETFs are more suited for medium- to long-term share trading than the previous ones listed in this article.

Overview of these shares

Through us, you can share trade the BetaShares Australian Government Bond ETF.

1. Vanguard Australian Fixed Interest Index ETF (ASX: VAF)
 

Exposure: Tracks the Bloomberg AusBond Composite 0+ Yr Index

AUM: A$6.98 million⁵

VAF provides diversified exposure to high-quality Australian government, semi-government and investment-grade corporate bonds. It has nearly $7 million in funds under management.

The ETF holds over 500 securities, with the bulk allocated to Commonwealth and state government debt, followed by highly rated corporate issuers.

Duration typically sits around six years, striking a balance between interest-rate sensitivity and income stability.

Distributions are paid quarterly, giving share traders a steady income stream.

VAF’s strengths are its low management fee (0.15% per annum), high liquidity and broad market coverage, making it a strong bond holding for diversified portfolios. It’s suitable for those seeking defensive exposure, lower volatility than shares and reliable income.

Highlights:

• A key risk includes interest-rate sensitivity; if the RBA were to hike unexpectedly, longer-duration bonds could decline
• Credit risk is low, given the quality of issuers
• In the past six months, returns have sat at around 1.92%

2. iShares Core Composite Bond ETF (ASX: IAF)
 

Exposure: Tracks the Bloomberg AusBond Composite 0+ Yr Index

AUM: A$3.37 billion⁶

As with VAF, IAF tracks the Bloomberg AusBond Composite 0+ Yr Index, providing diversified exposure across the full Australian bond market.

The fund invests in hundreds of investment-grade bonds, including Commonwealth and state government debt, supranationals and corporates. Its duration also sits in the mid-range (around six years), giving it sensitivity to shifts in RBA policy while still offering relatively stable income.

IAF charges a low management fee of 0.15% per annum, keeping it competitive with Vanguard’s VAF. Its high liquidity ensures tight spreads, an advantage for longer-term holding.

Highlights:

• Attractive for income-focused investors who want reliable distributions (as reliable as share trading can be, that is – remember there is inherent risk in all investing)
• A liquid and cost-effective bond ETF that’s shown solid growth over the past 3 – 6 months, making it a good consideration for conservative investors
• Over the past six months, it’s seen returns of around 2.31%

3. BetaShares Australian Government Bond ETF (ASX: AGVT)
 

Exposure: Australian government bonds

AUM: A$1.07 billion⁷

AGVT is designed to give investors exposure to a portfolio of Australian government bonds with maturities of seven – 12 years. It’s a longer-duration ETF than broad composite funds like VAF or IAF, which makes it more sensitive to interest-rate changes – and more capable of delivering capital gains when yields fall.

The ETF invests exclusively in high-quality Commonwealth and state government securities, ensuring very low credit risk. By focusing on longer-dated bonds, AGVT provides a purer play on interest-rate movements. When markets price in rate cuts, the ETF typically outperforms shorter-duration peers.

The management fee is 0.20% per annum – slightly higher than IAF and VAF, but it does offer specialised exposure. Distributions are quarterly, providing dependable cash flow.

Highlights:

• AGVT is best suited for share traders seeking growth potential within fixed income
• One of its main risks is its duration profile; if rates rise unexpectedly, AGVT can underperform significantly, given its exposure to longer-term bonds
• Over the past six months, the ETF has seen an increase of roughly 2.55%

How to trade ASX-listed bond ETFs with IG AU

CFDs

1. Open a CFD trading account with IG AU
2. Search for ASX bond ETFs on the IG platform
3. Decide whether to go long (buy) or short (sell)
4. Choose your position size
5. Set stop-loss and limit orders
6. Place your trade and monitor it

Share trading

1. Open a share trading account with IG AU
2. Search for ASX bond ETFs 
3. Choose the ETFs you want to buy
4. Determine how many units you want to purchase
5. Place your order
6. Monitor your investment and collect any dividends

FAQs about bond ETFs

Footnotes
 

1. Vanguard, September 2025
2. TradingView, September 2025
3. TradingView, September 2025
4. TradingView, September 2025
5. TradingView, September 2025
6. TradingView, September 2025
7. TradingView, September 2025