There are two hybrid government/corporate bond funds issued by iShares.  The first, iShares’ Barclays Intermediate Government/Credit Bond ETF (GVI), holds a total of 223 various bonds.  The fund is 62% invested in U.S. Treasury Notes and bonds issued by government agencies, 14% invested in Industrials, and 12% invested in Financial Institutions.  Of the non-government securities, GVI holds bonds in such companies as Bank of America, Cisco, and Pfizer.  Over half of the notes/bonds were issued with a maturity of 1-5 years.  The fund charges an expense ratio of 0.20% and trades just under 27,000 shares on average.
 
The second hybrid bond ETF by iShares is the Barclays Government/Credit Bond ETF (GBF). The main difference between this fund and GVI is length of maturity.  GBF has over half of its funds in bonds issued with a maturity of 1-5 years, but has 27% in bonds with an issued maturity of 5-10 years and an additional 8% in bonds issued with a maturity of 25+ years.  GBF has over half of its funds in government and U.S. agency bonds, another 17% in Industrials, and 10% in Financial Institutions.  The fund’s top non-government bonds include Consolidated Edison and Wal-Mart.  GBF trades just over 8,000 shares on average and charges an expense ratio of 0.20%.
    
In the table below,  we can see that the short and intermediate term funds are relatively flat for the year, a result of low interest rates set by the government.  The inflation-protected fund, TIP, and the two hybrid funds have had modest YTD returns.  Higher returns should be expected from the hybrid funds because corporate bonds held by the funds pay higher interest rates than the risk-free government notes/bonds.  There is one issue that should be addressed. As the year has progressed, dividend payments have been declining for most funds.  This will affect the overall return and could make these funds less attractive.