Access short duration fixed income securities with AVSF and SDSI
Bond markets have been hit with sustained volatility, making them just as unreliable for generating returns as equity markets this year. With inflation still at an all-time high and the Federal Reserve continuing to aggressively raise interest rates, this volatility doesn’t appear to be abating any time soon.
Columbia Threadneedle’s head of multi-asset strategy, Anwiti Bahuguna, told Bloomberg that “bond market volatility will remain elevated over the next six to 12 months,” adding that the Fed may ease its rate hikes the next month. next year only to resume if the economy is stronger. provided that.
According to Sandra Testani, vice-president of ETFs product and strategy for American Century Investments, the fund manager thinks “a recession is likely for the US and Europe” and expects inflation “to go down going forward… but does not return to its former level”.covid levels anytime soon.
“There is also a solid chance of stagflation going forward,” she added.
As a result, Testani said she sees a preference among investors for credit funds “that have the potential to provide inflation protection or reduce the inflation of returns.”
“In fixed income, there is a preference for higher quality over high yield, and short and ultra-short duration over long-term assets,” she said.
For bond investors looking for higher quality, shorter duration options for their portfolios, there are Avantis Short Term Fixed Income ETFs (AVSF ) and the American Century Short Term Strategic Income ETFs (SDSI ).
AVSF invests primarily in higher quality debt securities of a diversified group of US and non-US issuers with shorter maturities. The fund’s portfolio managers seek out bonds with high expected returns through a process that uses an analytical framework, which includes an assessment of each bond’s expected income and capital appreciation.
AVSFwhich has an expense ratio of 0.15%, is targeting an average maturity of three years.
Meanwhile, the new launch SDSI seeks income and, as a secondary objective, long-term capital appreciation. The strategy will seek to generate an attractive yield by investing in several segments of the fixed income market, which maintain a short duration objective.
The fund invests in high quality, high yielding non-cash debt securities. These securities may include corporate bonds and notes, government securities and securities backed by mortgages or other assets.
SDSI is a transparent asset ETFs with holdings disclosed daily and an expense ratio of 0.32%.
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