The Schwab 5-10 Year Corporate Bond ETF (SCHI) has a high duration and exposure to corporate credit. The Fed’s concern about maturity walls in 2024 and 2025 may lead to lower nominal rates. With 90% portfolio exposure in industrials and financials, the ETF’s value compared to better credit-calibrated instruments may be dampened. Consider exploring international markets for value-investment opportunities.
The Vanguard Ultra-Short Bond ETF offers a solution for fixed income investors concerned about potential rate hikes. With a focus on short-term debt, it mitigates rate risk and boasts a 30-day SEC yield of over 5%. Investors seeking a longer yield curve can consider the Vanguard Short-Term Bond Index Fund ETF Shares, which tracks a diverse bond index.
Volatility in the Treasury bond market is once again flirting with its recent lows. That could be good news—or it could be the forerunner of
Fixed income investors have faced a tumultuous year with rapid rate changes and anticipation of rate cuts. Instead of waiting on U.S. fixed income, consider high yield Asia bonds for lower interest rate risk and improving credit outlooks. The KraneShares Asia-Pacific High-Income Bond ETF (KHYB) offers reduced rate sensitivity and credit risk, making it an intriguing option.
China plans to issue $139 billion in ultra-long bonds to stimulate growth. This presents investment opportunities in ETFs domestically and in the US, offering higher yields. Investors can consider Vanguard Long-Term Bond ETF (BLV), Vanguard Long-Term Treasury ETF (VGLT), and Vanguard Long-Term Corporate Bond ETF (VCLT) for long-term debt exposure.
Record issuance of municipal bonds is flooding the debt market, providing an attractive supply. With the possibility of rate cuts, issuers are taking advantage of the situation to issue more debt. Municipal bonds offer high credit quality and attractive yields, making them an ideal choice for investors seeking balance between yield and credit risk.
Asset managers have varied economic expectations, with bond futures predicting a decrease in the Federal Reserve’s short-term federal-funds rate to avoid a recession. The concentration of BBB rated corporate bonds in the market is close to an all-time high, posing potential risk in a recession. Despite recent performance, funds heavily invested in BBB debt warrant consideration for diversification.
The iShares Short Treasury Bond ETF (SHV) offers a way to avoid duration risk and invest in the USD. Economic differences among countries are driving inflation and interest rate expectations. With a stronger US economy and higher inflation expectations, SHV’s low expense ratios make it an attractive option for long USD and short duration strategies.
Investors are extending bond portfolio durations to hedge against interest rate cuts and capitalize on a resilient US economy in 2024. The BondBloxx Bloomberg Ten Year Target Duration US Treasury ETF (XTEN) has garnered strong investor interest, offering exposure to US Treasury securities with an average 10-year duration. BondBloxx also expanded its ETF range to include credit-specific high yield bonds.
The Markit iBoxx USD Liquid Investment Grade Index is down 2.43% year-to-date, signaling reduced expectations for interest rate cuts. The VanEck Moody’s Analytics BBB Corporate Bond ETF (MBBB) stands out, offering attractively valued bonds with reduced downgrade risk. With a strong income stream and robust diversification properties, MBBB presents an appealing opportunity in the current market environment.
The Bloomberg U.S. Aggregate Bond Index is one of the most widely observed fixed income gauges in the world. And it serves as the benchmark
Investing in bond funds for retirement may not be as safe as it seems. The Bank of England’s struggles with bond investing highlight the risks, especially as interest rates change. Personal investors using bond funds or ETFs face valuation and volatility issues, leading to substantial losses. Careful consideration and diversification strategies are essential for successful bond investing.
Short-term bonds, with maturities of 1-3 years, offer low-risk, steady income. The BondBloxx Bloomberg Two Year Target Duration US Treasury ETF (XTWO) is a popular option, providing a 30-day SEC yield of 4.20%. While not likely to deliver high returns, short-term bonds are less volatile and can be beneficial during periods of declining interest rates and inflation.
Eaton Vance’s Intermediate Municipal Income ETF (EVIM) offers a compelling opportunity in the current economic environment. With skilled active management and decades of experience, it provides diversified exposure to the municipal bond market. EVIM holds 59 securities with an average duration of 5.76 years, offering income exempt from regular federal tax. This ETF could help limit portfolio risks.
