ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Direct Indexing
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Financial Literacy
    • Fixed Income
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Multifactor
    • Night Effect
    • Portfolio Strategies
    • Responsible Investing
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Core Strategies Channel
  2. An ETF To Strike a Balance Between Yield and Duration
Core Strategies Channel
Share

An ETF To Strike a Balance Between Yield and Duration

Ben HernandezJul 18, 2022
2022-07-18

The current market for bonds is causing a conundrum for fixed income investors trying to toe the line between getting maximum yield and giving up price appreciation. One way to get yield while also limiting rate risk is to stay within range of intermediate-duration debt.

This is what the Avantis Core Fixed Income ETF (AVIG B-) does with an average duration of about 6.4 years (as of the fund’s holdings on June 30). The majority of the fund, about 43%, resides in duration of about four to six years, thereby limiting duration as the U.S. Federal Reserve continues to tighten monetary policy with more rate hikes ahead.

Also, this pushes investors further out on the yield curve, which results in a 30-SEC yield of 3.28%. In order to get more yield, fixed income investors will certainly have to take on more risk, but AVIG doesn’t expose the investor to too much risk, with about 29% of its holdings in BBB-rated debt.

The majority of the fund resides in safe haven U.S. government debt at almost 50% of its holdings. The rest of the allocation is spread amongst AAA- to A-rated debt, which keeps risk-averse investors happy.

An Active Option in a Tricky Bond Environment

With just a 0.15% expense ratio, exchange traded fund (ETF) investors also get more dynamic exposure to the bond market with AVIG. An active management strategy allows the portfolio managers to essentially do what they do best: put control of the holdings in the hands of professionals.

In the tricky bond environment right now, that’s probably one the better solutions given the uncertainty ahead. While investors appear to be heading back into bonds again amid recession fears, this could tilt the yield the other way, but active management can compensate for any market changes.

Highlights of AVIG:

  • Invests in a broad set of debt obligations across sectors, maturities, and issuers.
  • Pursues the benefits associated with indexing, such as diversification and transparency of exposures, but with the ability to add value by making investment decisions using information embedded in current yields.
  • Efficient portfolio management and a trading process that is designed to enhance returns while seeking to reduce unnecessary risks and transaction costs.
  • Built to fit seamlessly into an investor’s asset allocation.

For more news, information, and strategy, visit the Core Strategies Channel.


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X