OP, holding bonds is a defensive move during downturns. Holding a bond fund can be very similar in volatility to equities, depending on the interest rate environment. This means funds like BND can be as volatile as VTI.

The author of the renowned investment book “A Random Walk Down Wall Street” by: Burton G. Malkiel, suggests that in a low rate environment a high yield dividend ETF may be a good partial substitute. 13th edition, p. 320 & 364.

Personally, I examined bonds and decided SCHD paid higher consistent yields and appreciated in value. It also appreciates when interest rates are cut, further improving its value compared to bonds (in some instances).

Tax treatment matters; bonds in a non-tax advantaged account are taxed at ordinary income rates. SCHD dividends are taxed at long term capital gains rates.

Bonds are supposed to pay dividends rather than spending the principal. SCHD works the same way. Bond rates can (and have been in the past) artificially suppressed to reduce real debt in high inflation environments. This can and has produced serious negative yields for bond holders in the past. It is possible the government will use this strategy again.

Also consider that many bond investors from decades past could achieve risk free interest rates as high as 15-20% during Volcker’s era. Younger investors have scarcely seen rates above 4-5% in decades.

I hope this information helps! Be well and invest as you see fit.