A new ETFdb Portfolio offering a broad-based approach to fixed income exposure is now available to ETFdb Pro members. The Better-Than-AGG ETFdb Portfolio is designed to give investors exposure to every corner of the global bond market, tapping into segments that are often overlooked despite meaningful return enhancement and diversification benefits.
In recent years investors have become increasingly comfortable with achieving fixed income exposure through the exchange-traded structure; according to the National Stock Exchange, bond ETFs experienced more than $23 billion in net inflows during the first eight months of 2011. Among the most popular bond ETFs are those in the Total Bond Market ETFdb Category that are often at the core of long-term, buy-and-hold portfolios. While ETFs such as AGG and BND offer broad-based exposure at a competitive price point, using them as “one stop shops” for bond exposure may be short-sighted. These ETFs are dominated by exposure to U.S. Treasuries, with relatively small allocations to other corners of domestic investment grade bonds.
While high quality U.S. bonds certainly belong in a balanced portfolio, bond exposure shouldn’t be limited to this narrow slice of the fixed income market. An impressive string of innovation in the ETF industry has opened up corners of the fixed income market that were previously difficult to access, but that have the potential–when used correctly–to enhance effective yields, diversify U.S. dollar exposure, and smooth out overall volatility.
The Better-Than-AGG Total Bond Market ETFdb Portfolio consists of ten fixed income ETFs that provide access to thousands of individual securities across a number of different countries. This ETFdb Portfolio offers a more attractive yield profile than funds such as AGG, with what we believe to be lower overall risk.
The Better-Than-AGG Total Bond Market ETFdb Portfolio is now available to ETFdb Pro members, and can also be accessed through a free 7-day trial to ETFdb Pro. The ETFdb Pro subscription includes access to nearly two dozen all-ETF Model Portfolios, including both thematic strategies for tactical investors and long-term portfolios for those planning for retirement.
Disclosure: No positions at time of writing.