Aggregate Bonds

Aggregate Bonds represent a broad index of investment-grade, fixed-income securities, including government debt, corporate bonds, and mortgage-backed securities.

Aggregate bonds serve as the primary defensive safe-haven asset class in tactical investment models. When equity momentum trends downward, models like GEM or Dual Momentum rotate 100% of their assets into intermediate or aggregate bonds, which traditionally rise or hold steady when stock markets crash.

Common ETFs used to track this asset class include the Vanguard Total Bond Market ETF (BND) and the iShares Core U.S. Aggregate Bond ETF (AGG). These ETFs offer highly liquid, low-cost exposure to thousands of high-quality bonds.

While aggregate bonds provide stable income and a reliable equity hedge, they are subject to interest rate risk. When central banks raise rates rapidly (as in 2022), bond prices fall, which can temporarily reduce their effectiveness as a portfolio diversifier unless paired with cash or gold.