For years, fixed income investors have relied on the Bloomberg US Aggregate Bond Index, also known as the Agg, as a barometer for the U.S. bond market.
There’s certainly nothing wrong with focusing on the Agg. The Agg provides a very good read at where the investment grade government and corporate bond market sits.
That being said, investors may wish to try to outpace these stable benchmarks, especially in fully valued markets. In recent insights, Eaton Vance discusses navigating the current bond market.
“In bonds, we note that yields have come down and spreads are tight,” noted Eaton Vance. “But opportunities still exist across the credit spectrum as a soft landing may keep default rates lower than priced in some sectors and credit cohorts.”
Staying Ahead of the Game
To navigate the U.S. bond market and get ahead of the Agg, investors should look to the Eaton Vance Total Return Bond ETF (EVTR ). EVTR is a core plus fund that offers strong yield and competitive long-term results. The fund is benchmarked to the Agg, with the added benefit of an active management team.
This fund has been crushing the Agg in terms of both near-term and long-term results. As of November 21st, 2024, EVTR’s NAV was up 9.04% over the last year, while the Agg is only up 6.22%.
Growth of capital isn’t the only benefit that EVTR currently offers. As of November 20th, 2024, the fund has a 30 day SEC yield of 5.05%.
By looking under the hood of EVTR, investors can get a better idea why this fund is continuing to perform. The crux of EVTR’s portfolio sits in a mix of investment-grade bonds that one would traditionally find in a core strategy.
However, EVTR will also look beyond core investments to seek stronger income and returns. This includes opportunistic investments in high-yield bonds.
As such, the fund can offer the best of both worlds. It can foster a stable core portfolio with the Agg’s guidance, while looking beyond the index for additional outperformance.
It’s no secret that investors are increasingly opting to utilize this Eaton Vance strategy. FactSet data shows that the fund has seen over $430 million in inflows over the last three months, as of November 11th, 2024.
For more news, information, and analysis, visit The ETF Yield Channel.
