Even with the threat of rising rates, yields are still low by historical standards. Fixed income investors looking to extract more yield have a pair of options from FlexShares. As credit markets start to improve in an improving U.S. economy, high yield is an option for investors to get extra passive income.
Fixed income investors looking to safely diversify their portfolios beyond safe haven Treasury notes can opt for the Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) . “Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property,” an Investor.gov article explained. “Mortgage loans are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity.
Intermediate exposure can give fixed income investors the positioning sweet spot when it comes to duration. Two Vanguard funds to consider are the Vanguard Intermediate-Term Treasury Index Fund ETF Shares (VGIT) and the Vanguard Interim-Term Corporate Bond ETF (VCIT) .
Inflation continues to be a concern these days, and many investors are looking for investments that can keep pace with, or hopefully beat, the rate of inflation. As a result, Treasury Inflation-Protected Securities, or TIPS, have become a popular investment option.
While high yield debt is an option to consider in the current fixed income environment, some investors may not want the added risk, but an option to consider is the FlexShares High Yield Value-Scored Bond Index Fund (HYGV) .
In today’s low-rate environment, many fixed income investors are diversifying their portfolios with debt markets overseas. Vanguard offers two compelling options on this front. Capturing income from debt markets outside the U.S allows investors to access credit profiles from different countries that are in various stages of their respective economic cycle.
Corporate bond exposure can help diversify a fixed income portfolio, especially if it’s laden with safe-haven government debt. Vanguard offers three ETFs to choose from. Corporate bonds have the ability to offer more attractive yields, as compared to government debt like Treasury notes.
Actively managed exchange traded funds are bringing in assets at a prodigious pace , but the group remains a small slice of the overall ETF industry. An obvious area in which active ETF issuers can gain market share is fixed income.
The tightening of credit spreads may dissuade fixed income investors from heading into corporate bonds, but an added dose of scoring efficiency can help ease credit risk concerns with the FlexShares Credit-Scored US Long Corporate Bond Index Fund (LKOR) .
KraneShares has introduced a new China-focused fixed income ETF providing exposure to renminbi-denominated securities included in the Bloomberg Barclays Global Aggregate Index . The fund is the first ETF to target renminbi-denominated securities included within the Bloomberg Barclays Global Aggregate Index.
Leveraged loans and their related exchange traded funds are regaining fans this year as advisors look for the elusive combination of income and protection against rising Treasury yields. That trend could continue benefiting the actively managed SPDR Blackstone/GSO Senior Loan ETF (NYSEArca: SRLN) .
The growth versus value narrative doesn’t have to begin and end with equities when bond-focused exchange traded funds (ETFs) can get in on the action with the FlexShares Credit-Scored US Corporate Bond Index Fund (SKOR) . Even as the effects of the pandemic are slowly dissipating, the risk of default is always apparent when investing in debt issues.
Fixed income investors looking to get high yield exposure outside of the U.S. while limiting duration risk will want to consider the Invesco Global Short Term High Yield Bond ETF (PGHY) . PGHY offers investors the yield they desire in this current fixed income environment.
Credit spreads are tightening, which could be causing investors to shy away from the extra risk associated with high yield, but there are safer options like municipal bonds and the Vanguard Tax-Exempt Bond ETF (VTEB) . The past month saw equities get racked with a bout of volatility as inflation fears put investors in a state of unease.
