While some investors are banking on the market heralding in growth this year, many experts remain wary of inflation.
This is due in part to the uncertainty surrounding the economic effects of the new U.S. administration’s policies. Some of the anticipated or announced measures could very well lead to the Fed’s fight against inflation stalling out. In particular, concerns have been bubbling about how anticipated tariffs may have an adverse effect on inflation.
Even though these concerns are currently hypothetical, investors may wish to account for inflation when building their portfolio. Among fixed income investments, one particularly prudent way to play around inflation is through ultra-short bonds.
Due to their shorter maturities, ultra-short bonds can be exposed to far less inflationary risk than other fixed income strategies. As such, some investors use these bonds to lessen their fixed income portfolio’s exposure to long-term inflation. Even when not employed defensively, these bonds are also used simply to generate valuable income.
EVSB Offers an Ultra-Short Solution
Check out the Eaton Vance Ultra-Short Income ETF (EVSB ), for instance. It provides exposure to an actively managed portfolio of ultra-short duration bonds. Despite being actively managed, the fund has a relatively low net expense ratio of 17 basis points.
Within EVSB’s portfolio is a wide mix of ultra-short-duration fixed income securities. That said, over half the fund’s portfolio rests in investment-grade bonds. Combined with an active management team, investment-grade securities can help lower the risk profile for a fixed income portfolio.
EVSB’s ultra-short portfolio has been posting competitive yields for its investors. As of January 24, 2025, the fund has a yield to maturity of 5.09%. This yield highlights the fund’s potential to generate income while mitigating interest rate risk.
FactSet data illuminates how the fund has piqued interest from investors over the last few months. Notably, the fund has seen more than $70 million in net flows over the last two months, as of January 27, 2025.
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