Building a Bond Ladder with Individual Bonds and ETFs

Bond funds had their worst calendar-year return in several decades in 2022. The broad market index was down 13% that year, while the S&P 500 was down 18%. People were disappointed that bonds didn’t hold up when stocks were down. They’re doubly disappointed that bonds still haven’t fully recovered from the losses in 2022 as of mid-November 2025, while stocks have not only recovered but are up nearly 50% since then.

Rightly or wrongly, people blame bond funds for this loss. They think they would’ve avoided the loss if they had a bond ladder, because every bond in the ladder would pay out in full at maturity. While a bond ladder is better in some cases, and not a magic bullet in other cases (see Two Types of Bond Ladder: When to Replace a Bond Fund or ETF), it’s difficult to fight the perception that a bond ladder is safer than bond funds. Psychological comfort is important. If it makes you feel better to have a ladder and avoid bond funds, then make one.

How difficult it is to implement a ladder depends on the types of bonds you invest in. It’s easier to do it with Treasuries and brokered CDs. It’s more difficult to do it with corporate bonds or munis. ETF providers have created products to help with this endeavor.

Treasuries

You can buy Treasuries at major brokers such as Vanguard, Fidelity, and Charles Schwab with no fee. New-issue Treasuries come in these maturities:

Maturity	New Issue Frequency
4-week, 6-week, 8-week, 13-week, 17-week, 26-week	Weekly
52-week, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, 30-year	Monthly

See How To Buy Treasury Bills & Notes Without Fee at Online Brokers. While there’s no 4-year Treasury or 6-year Treasury as a new issue, you can fill in the missing rungs by buying on the secondary market. See How to Buy Treasury Bills & Notes On the Secondary Market.

If you don’t want to mess with individual Treasuries, iShares offers iBonds Term Treasury ETFs to help you build a ladder. Please don’t confuse these with I Bonds from TreasuryDirect. Each of these Term Treasury ETFs holds Treasuries maturing in one specific year. For example, iShares iBonds Dec 2028 Term Treasury ETF (IBTI) holds Treasuries that will mature between January 2028 and November 2028. This ETF will liquidate in December 2028 and pay out in cash.

Instead of buying one Treasury for each year, you would buy one different ETF for each year. iShares has one of these ETFs each year from the current year through the next 10 years. You would buy the 2026 ETF for 2026, the 2027 ETF for 2027, the 2028 ETF for 2028, and so on. They’ll put out new ETFs as each ETF liquidates at the end of its life.

iShares charges a 0.07% expense ratio for these Term Treasury ETFs. Treasuries trade in $1,000 increments. These iShares Term Treasury ETFs are about $25 per share. You can get more granular and buy in smaller amounts when you build and add to your ladder with these ETFs. The ETFs also make tax reporting easier than individual Treasuries when you hold them in a taxable account.

TIPS

TIPS are a special type of Treasuries. You can buy them in the same way as you buy regular Treasuries, except that there are fewer new issues. You must buy most of them on the secondary market when you want a TIPS ladder. There are no TIPS maturing between 2036 and 2039, but this gap will be filled in the next few years.

The website TIPSLadder.com tells you which TIPS to buy and how many to buy when you enter the desired size and length of your ladder.

iShares also offers iBonds Term TIPS ETFs. Similar to the Term Treasury ETFs, each Term TIPS ETF holds TIPS that will mature in one specific year. For example, iShares iBonds Oct 2028 Term TIPS ETF (IBIE) holds six TIPS that will mature between January 2028 and October 2028. It will liquidate and payout in cash in October 2028. iShares has one of these ETFs each year from the current year through the next 10 years. You would buy these 10 different ETFs if you want a 10-year ladder. The expense ratio is 0.1%.

It may be more convenient to buy these Term TIPS ETFs. They also make tax reporting easier than individual TIPS when you hold them in a taxable account.

CDs

It’s more difficult to build a ladder with direct CDs. You’d have to open accounts with multiple banks to get the best rates for each maturity. It’s easier to buy brokered CDs in a brokerage account, but watch out for callable CDs. The rates on non-callable CDs aren’t that much better than Treasuries, and CDs don’t have state and local tax exemptions. See Buying CD in a Brokerage Account vs Bank CD or Treasury.

Corporate Bonds

The yields on investment-grade corporate bonds are higher than yields on Treasuries of comparable maturities because corporate bonds have a higher risk. There are no state or local tax exemptions on corporate bonds in a taxable account.

It’s better to use ETFs when you want a corporate bond ladder because it’s difficult to diversify in individual corporate bonds.

iShares offers iBonds Term Corporate ETFs. Invesco offers BulletShares Corporate Bond ETFs. They work similarly to the Treasury and TIPS counterparts. Each ETF holds hundreds of bonds from different corporations, all maturing in the designated year. Both series have one of these ETFs each year from the current year through the next 10 years. Each ETF will liquidate and pay out in cash in December of the designated year. You would buy 10 ETFs if you want a 10-year ladder. Both the iShares series and the Invesco series charge a 0.1% expense ratio.

Munis

It’s the same story with municipal bonds. It’s better to use ETFs when you want a muni bond ladder because it’s difficult to diversify in individual muni bonds.

iShares offers iBonds Term Muni Bond ETFs. Invesco offers BulletShares Municipal Bond ETFs. Each ETF holds over 1,000 muni bonds from different municipalities, all maturing in the designated year. iShares has an ETF each year from the current year through the next 6 years. Invesco has one each year from the current year through the next 10 years. Each ETF will liquidate and pay out in cash in December of the designated year. Both the iShares series and the Invesco series charge a 0.18% expense ratio.

Because muni bond yields are lower than taxable bond yields, the 0.18% expense ratio takes a bigger bite out of the muni bond yields than the more reasonable 0.07% and 0.10% expense ratios on the Treasury, TIPS, and corporate bond ETFs. If I were to build a bond ladder with these ETFs, I would first consider doing one with Treasury, TIPS, or corporate bond ETFs in a pre-tax account.

Rolling Ladder ETFs

iShares also offers four ladder ETFs that invest in the Term ETFs as a rolling ladder. It has one ETF for Treasury (LDRT), one for TIPS (LDRI), one for investment-grade corporate bonds (LDRC), and one for high-yield (junk) bonds (LDRH). For example, LDRT invests 1/5 of its assets in each of the 2026 through 2030 Term Treasury ETFs. When the 2026 ETF liquidates and pays out, it will put the money in the 2031 ETF and keep it going.

These rolling ladder ETFs aren’t that interesting. You might as well invest in a normal bond mutual fund or ETFs that invest in bonds with a target range of maturities. The market has realized this as well. The rolling ladder ETF LDRT has $21 million in assets. The regular short-term Treasury ETF SHY is 1,000 times larger with $24 billion in assets.

Distributing Ladder ETFs

Northern Trust offers an interesting product called distributing ladder ETFs. Instead of buying 10 ETFs for a 10-year ladder, you just buy one ETF, which holds a ladder inside the ETF and distributes the principal when the bond matures.

For example, Northern Trust 2035 Inflation-Linked Distributing Ladder ETF (TIPB) holds 10 TIPS, one maturing each year from 2026 through 2035. It distributes the interest earned on these TIPS, plus the principal from each TIPS as it matures. It’s a 10-year TIPS ladder managed for you in one ETF. Northern Trust currently has four of these TIPS distributing ladder ETFs running through 2030, 2035, 2045, and 2055. The expense ratio is 0.1%.

These TIPS distributing ladder ETFs have a great design, but the market hasn’t recognized them yet because they only started in August 2025. Each ETF only has about $5 million in assets as of mid-November 2025. I hope they will get more traction in the marketplace; otherwise, they run the risk of not surviving the ETF market competition.

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A ladder is helpful when you want to spend a preset amount on a preset schedule. Although I don’t hold a ladder because I don’t need to spend a preset amount on a preset schedule, some find a ladder psychologically beneficial, even if it doesn’t make much financial difference.

You can buy individual Treasuries and TIPS when you want a Treasury or TIPS ladder. The iShares iBonds Term Treasury and Term TIPS ETFs offer convenience at a reasonable price. It’ll be easier still if the Northern Trust distributing ladder ETFs become more popular. Building a ladder with the iShares and Invesco ETFs makes more sense when you want a corporate or a muni bond ladder because the ETFs provide diversification.