The Best-Performing Bond ETFs of 2025

Group 1: Convertible Bonds - The best performing fixed income ETFs in 2025 are dominated by convertible bond strategies, with the Calamos Convertible Equity Alternative ETF (CVRT) leading at a gain of 29.9% [3] - Convertible bonds offer lower yields compared to traditional corporate bonds due to their equity conversion option, which has become valuable in a rising stock market [2] - The convertible bond ETF category is small, with only eight funds, and the largest fund, CWB, has $4.7 billion in assets, while CVRT is significantly smaller at $13 million [4] Group 2: Local Currency Emerging Market Bonds - Local currency emerging market bond ETFs have gained traction, with the First Trust Emerging Markets Local Currency Bond ETF (FEMB) leading the category with a return of 21% [9] - These funds typically offer higher yields than dollar-denominated counterparts, with major local currency funds yielding between 6% and 7% [7] - The MSCI Emerging Markets Currency Index has increased by 6.3% this year, positively impacting the performance of local currency bond ETFs [6]