Two fixed income ETF strategies that may help investors profit from rate hikes
According to Joanna Gallegos, co-founder of bond ETF issuer BondBloxx, interest rate jitters are pushing investors toward the short end of the yield curve.
Gallegos, the former head of global ETF strategy at JP Morgan, thinks it’s a sound approach.
“It’s a gut feeling trade. This isn’t 2022. This isn’t even five years ago. Yields are very radically different,” she said. Bob Pisani CNBC’s “ETF edge“Early this week.
Gallegos predicted that the Federal Reserve would raise interest rates another 100 basis points.
“That’s the market estimate … until around July. So as interest rates rise, people are a little bit uncertain about what will happen to really far-away bond prices,” she said. “The longer the duration, the more price risk you take.”
But Main Management CEO Kim Arthur said: Attractive long-term bonds As part of your barbell strategy. Long-term bonds are a valuable hedge against recession, he said.
“It’s part of your allocation, but not the whole, because as we know, stocks will significantly outperform bonds over the long term,” he said. “They will provide an inflation hedge on top of that.”
When asked if the 60/40 stock/bond ratio was dead, Gallegos replied that it was true a year ago, but not now.
“This was … before the Fed hiked rates by 425 basis points last year, and everything was changing year-on-year in terms of yields,” she said.
By the time it closes on Friday, US 10 year Treasury bond The yield is about 3.7%, up 84% from a year ago. on the other hand, US 6-month Treasury yield At about 5.14%, it reflects a 589% increase in one year.
Summarize this content to 100 words According to Joanna Gallegos, co-founder of bond ETF issuer BondBloxx, interest rate jitters are pushing investors toward the short end of the yield curve.Gallegos, the former head of global ETF strategy at JP Morgan, thinks it’s a sound approach.”It’s a gut feeling trade. This isn’t 2022. This isn’t even five years ago. Yields are very radically different,” she said. Bob Pisani CNBC’s “ETF edge”Early this week.Gallegos predicted that the Federal Reserve would raise interest rates another 100 basis points.”That’s the market estimate … until around July. So as interest rates rise, people are a little bit uncertain about what will happen to really far-away bond prices,” she said. “The longer the duration, the more price risk you take.”But Main Management CEO Kim Arthur said: Attractive long-term bonds As part of your barbell strategy. Long-term bonds are a valuable hedge against recession, he said.”It’s part of your allocation, but not the whole, because as we know, stocks will significantly outperform bonds over the long term,” he said. “They will provide an inflation hedge on top of that.”When asked if the 60/40 stock/bond ratio was dead, Gallegos replied that it was true a year ago, but not now.“This was … before the Fed hiked rates by 425 basis points last year, and everything was changing year-on-year in terms of yields,” she said.By the time it closes on Friday, US 10 year Treasury bond The yield is about 3.7%, up 84% from a year ago. on the other hand, US 6-month Treasury yield At about 5.14%, it reflects a 589% increase in one year.
https://www.cnbc.com/2023/03/11/two-bond-etf-strategies-that-may-help-investors-profit-from-rate-hikes.html Two fixed income ETF strategies that may help investors profit from rate hikes
