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.
Broadly speaking, investors view emerging markets as riskier than developed economies, and the same is true when comparing high-yield corporate bonds with investment-grade fare. Combine emerging markets and junk bonds and the ingredients are there for risky and volatile recipe.
Investors have various options to protect their bond portfolios from inflation, but with the ProShares High Yield—Interest Rate Hedged (HYHG) , they get hedging baked right into the exchange traded fund (ETF). With a focus on high yield, HYHG also gives investors an opportunity to edge out low yields on safe haven Treasury notes or other investment-grade debt.
Tight credit spreads might be keeping many fixed income investors from heading into corporate bonds, but funds like the Vanguard High Dividend Yield ETF (VYM) could benefit from a pension bailout. “U.S. President Joe Biden’s pension bailout might do more than just support troubled retirement plans,” a Bloomberg article said. “It could also spur tens of billions of dollars in demand for corporate bonds with the lowest investment-grade ratings, according to Citigroup Inc.”
As the Fed mulls over mull slowing down its bond-buying program, how can bond investors benefit? Last year, the Fed instituted a bond-buying spree amid the market tumult. That included purchasing risky bond assets like high yield exchange traded funds (ETF) to stymie the risk of defaults in the debt market.
In times like these, investors can limit portfolio drawdowns by diversifying with fixed income exchange traded funds. While the equity markets pulled back, investors turned to safe havens, purchasing bonds and pulling yields on Treasuries down.
Fixed income investors don’t have to venture too far out onto the yield curve in order to extract yield. They can do so with short-term corporate bond funds that minimize duration risk. One prominent example is the Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) .
Historically low interest rates are making for a challenging fixed income environment. VanEck offers three bond ETFs that can still thrive. The environmental, social, and governance (ESG) investing trend looks like it has the staying power.
With inflationary poised to surge and Treasury yields already having done so, these are tricky times on the fixed income front. Advisors can find relief with the WisdomTree Fixed Income Model Portfolio. “This model portfolio is focused on a diversified stream of income.
The past year saw high yield bonds rally strongly in the wake of March’s Covid-driven selloff as growth rebounded and a widely expected wave of corporate bankruptcies failed to materialize.
WisdomTree has launched a new ETF in the US providing exposure to alternative credit. The WisdomTree Alternative Income Fund (HYIN US) has listed on Cboe BZX Exchange and is linked to the Gapstow Liquid Alternative Credit Index .
With Treasury yields soaring, punishing other corners of the fixed income market in the process, advisors have their work cut out for them. Clients may be getting skittish about bond allocations, and the previously trusted 60/40 portfolio mix may not be as valuable as it once was.
