There are 15 asset classes an investor might consider in 2009 for high yielding, secure retirement income strategies. But, with all the current discussion about credit risk today, many of our readers at AboutETFs.com have shifted more interest to US Government-backed bonds or high grade corporate bonds. Some investors even wonder if they should move all of their bond allocations into U.S. Government paper. Let us examine that idea a bit more.

For ultimate safety of principal, of course, one should indeed stick with treasury bills, notes or bonds. The tradeoff right now is in the yield, or the lack of yield. With current yields on T-bills at .25 percent or lower, we do not see the risk-reward value. What should you do about this dilemma?

We recommend looking at a blended strategy that includes intermediate and short-term investment-grade corporate bonds along with the safer U.S. Government bonds. For those of you who want even more yield, we suggest mixing in a small allocation of lower-grade corporate bonds. Either way, your objective should be to increase income without placing too much of your portfolio in only one asset class.

Also, rather than select an individual security where there is much to lose in a default, we advise choosing from open-end mutual funds or closed-end funds. For even lower expenses than traditional funds you might select exchange-traded funds (ETFs). We have reviewed three bond-oriented ETFs that provide an excellent cross-selection of Treasury, mortgage-backed and corporate bonds. Here is a look at these ETFs along with our review of their investment strategy.

* (BND): Vanguard Total Bond Market ETF

* (LAG): Barclays Capital Aggregate Bond Fund SPDR

* (AGG): iShares Barclays Aggregate Bond Fund

Each one of these three ETFs attempts to replicate the Barclays Capital US Aggregate Bond Index, which is diversified into three asset classes:

* 25 percent is represented in investment-grade corporate bonds

* Treasury and Agency bonds (approximately 37 percent)

* 38 percent is allocated to securities that are mortgage-backed

In this index, Barclays assembled an average maturity of just under 7 years. 39 percent of the index portfolio matures in less than one year, while 34 percent matures in less than five years. But, how do the ETFS compare?

LAG, the State Street ETF, for example, has a lower trading volume than you may wish to consider (31,000 shares) and a relatively small market cap of ten million dollars. Vanguard has a great product in BND, but we end up leaning to AGG with a whopping market cap of $9.7 billion and 800,000 shares trading daily. How did these ETFs fare last year?

All three of these ETFs followed the Barclays index, and all performed quite respectably in 2008. Through a portion of February, 2009, BND, LAG, and AGG dropped by 3.6 percent. As for yields, they are at 4.5 percent for BND, 3.8 percent for LAG and 4.6 percent for AGG.

As for our other high yield strategy via investment-grade corporates, we need look no further than the unique LQD ETF. LQD is the only ETF exclusively holding corporate bonds. It is called the iShares iBoxx $ Investment Grade Corporate Bond Fund. Current distribution is at a generous 5.6 percent. This ETF follows the iShares iBoxx $ Liquid Investment-Grade Index. The index measures bonds that have high liquidity and are also investment-grade. With a maturity of 6.25 years and high daily trading volume, LQD might nicely round out your allocation choice for a safer high yield income strategy.

To wrap this up, look at blending income selections by way of funds rather than solitary bonds. Examine the advantages of the ETF choices mentioned to enhance your portfolio. Finally, if your risk tolerance allows it, mix in a conservative portion of non investment-grade corporate bonds for even higher potential yields. An important note is to consult all the disclaimer terms on the AboutETFs.com privacy and terms page to understand the scope of risk for buying and selling securities including the possible loss of principal you have invested. Nothing in the article should be construed to mean specific investment advice on only a select grouping of securities may work for investors, they may not be suitable for your needs. Readers should consult with a professional advisor and exercise due diligence before making investment decisions. Chance Carson, his companies, and staff are not making any offers to buy or sell securities in this article.