Fixed Income ETF Center
Welcome to the ETF Database Fixed Income ETF Center, home to valuable resources for investors looking to learn more about and gain exposure to a variety of segments of the global bond market. The ETF Database Fixed Income ETF Center is sponsored by iShares, an industry leader that boasts an impressive line up of over 180 ETFs, covering a vast array of asset classes, with everything from small cap stocks to international bonds and in between.
Many of the available instruments labeled as so called “all-in-one” bond funds can be very misleading at first glance. Some of the biggest and most popular products in the space are linked to total bond market benchmarks which offer exposure that is vastly different than what their name might suggest. An overwhelming number of ETFs that offer exposure to the investment grade U.S. debt market are dominated by Treasuries, resulting in a risk/return profile that may be less than optimal for those looking to achieve well-balanced exposure across multiple fixed income segments. In this article we examine the faults of traditional total bond market ETFs as well as offering a number of suggestions to help diversify your portfolio’s fixed income component.
Interest in fixed income products has surged in recent years as investors have embraced the exchange-traded product structure as a means of tapping into this essential asset class. With nearly 200 bond ETFs on the market, investors are faced with handfuls of intriguing products, some offering “plain vanilla” exposure, while others employ unique investment strategies; many of the new products on the market undertake creative approaches in accessing previously difficult-to-reach corners of the global bond market, resulting in quirky nuances and noteworthy differences between seemingly identical products. This article examines the different metrics used to compare fixed income ETFs and dives into the details of what to look for when picking out a bond fund that is right for you.
Hedging against the potentially adverse effects of inflation can be a formidable challenge even for the most seasoned investors. Luckily, the booming ETF industry has spawned handfuls of instruments capable of serving as defensive tools in helping to protect your portfolio against rising prices. This articles outlines over two dozen products that employ specific strategies, covering a variety of asset classes, which are deemed to be favorably positioned as inflationary pressures spike. We profile numerous, both domestic and international, inflation-linked ETFs, as well as covering some of the more targeted offerings outside of the bond space that could also serve as “inflation fighting” products.
Although bond ETFs have seen tremendous growth in recent years, the space continues to be dominated by products focusing on the domestic debt market. As more and more investors continue to diversify their portfolios with international equity exposure, both developed and emerging markets, the “home country bias” in their bond holdings has also begun to change. Investors have gradually started to expand the geographic scope of their portfolio’s bond component; many have diversified their exposure through the addition of emerging market and high yield debt, two asset classes which have demonstrated the potential to deliver impressive, uncorrelated returns. This article takes an in-depth look at the available offerings for invsetors looking to add more international flavor to their bond portfolio.
The sheer size of the bond ETF space, both in terms of growth and product diversity, showcases the robust demand for fixed income products that offer exposure to this core asset class. Recent developments in the space have further propelled growth as investors can now choose from an array of targeted bond ETFs, covering virtually every nook and corner of the global bond market. Investors looking to diversify away from traditional, investment grade U.S. debt have several dozens options available to them; this article takes a closer look at some of the recent innovations in the bond space, covering international, target maturity, and fundamental-weighted products.
When it comes to bond investing, the primary factors to consider are the creditworthiness of the issuer and the duration of the debt. The first concept, credit risk, is fairly straightforward: the less likely an issuer is to repay, the greater the coupon payment made to investors, showcasing the direct relationship between implied risk and expected yield. Accounting for the duration is a bit more challenging seeing as how interest rates can have a significant impact on the demand, and therefore the price, of an existing fixed income security. Although interest rates are expected to remain low for the foreseeable future, many investors are tweaking their portfolios with the addition of floating rate bonds; these fixed income offerings are well suited to hold their ground once rates start to rise, unlike fixed rate debt notes which will likely loose their luster. This article covers a handful of floating rate bond ETFs which steer clear of interest rate risk, highlighting key points about each of the available products.
Bond ETFs are somewhat unique in that the investor experience is quite different from actually holding individual bonds. First and foremost, ETF investors can never truly see their investments mature, given that the majority of bond ETFs are designed to operate indefinitely. Such an inherent difference means that most bond products will maintain a relatively constant interest rate risk and duration; however, innovation in recent years has brought forth new breeds of fixed income offerings that behave more like “regular” bonds. This article examines the common drawbacks amongst indexed bond ETFs and makes the case for why actively managed products in the space are most certainly worth a closer look.
As the cloud of uncertainty continues to loom over the global economic recovery, many investors are turning to short-term bond funds in an effort to evade the ongoing volatility and preserve capital. Deficit drama at home coupled with turmoil overseas has helped to pave the way higher for “safer” securities. Short-term bond ETFs have surged in popularity as investors are opting for safe, capital preservation in lieu of chasing after lucrative returns and high yields. This articles dives into perhaps the “safest” corner of the bond market, examining a number of defensive, short-term fixed income funds.
Although growth and innovation have been recurring themes in the ETF industry, the bond space remains riddled with quirky nuances and pesky drawbacks. Industry veteran, Mathew Patterson, examines the limitations of traditional fixed income ETFs; this in-depth interview sheds light on some of the more complex aspects surrounding bond ETFs, while also offering insights about the developments and advantages of target maturity fixed income products.
Bond ETF Resources
For investors looking to conduct more thorough research on fixed income investment opportunities, please consider the valuable resources listed below:
- Fixed Income Investing Overview
- Total Bond Market ETFdb Category Report
- Emerging Markets Bonds ETFdb Category Report
- Inflation-Protected Bonds ETFdb Category Report
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