It can be challenging to handle a bond bear market, a period during which investors drive bond prices down and yields—which move inversely to prices—higher. The good news is that the worst of this phase of the bond bear market may be over, and you can take steps to help mitigate the impact of increased volatility and higher interest rates.
As default rates among low-rated U.S. companies dropped to their lowest level in months, fixed income investors have grown more “risk-on.” The iShares iBoxx $ High Yield Corp Bond ETF (NYSEArca: HYG) increased 0.9% year-to-date while the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) fell 4.8%.
As Treasury bond yields continue to tick higher, puts corporate bonds may be in a bind as fixed income investors increasingly opt for government bonds with less default risk. As the market continues to decide whether it wants to continue past its pre-pandemic levels or languish further, investors can get quality corporate bond exposure with assets like the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) .
Proponents of exchange traded funds (ETFs) frequently cite their rock-bottom fees. According to a Kiplinger article , various studies substantiate this claim. “Numerous studies show that over the long term, managed mutual funds cannot beat an index fund, such as an ETF,” the article noted. “For example, according to the SPIVA scorecard , 75% of large cap funds ‘underperformed’ the S&P 500 over five years through Dec. 31, 2020.
When peeling back the layers of U.S. president Biden’s infrastructure plan, one of the key components is shoring up internet access to all Americans. This facet can help bolster cloud computing services and the Global X Cloud Computing ETF (CLOU) .
The ARK Genomic Revolution Multi-Sector Fund ( ARKG ) is obviously positioned as a genomics fund, but as an actively managed exchange traded fund, it can venture into other growth areas in the healthcare sector. That includes telemedicine, as highlighted by the fund’s significant exposure to Teledoc .