As indicators mount in favor of inflation easing, investors are left wondering: where does this leave their fixed income strategies? Recent insights from the Eaton Vance team highlight a number of fixed income opportunities investors could capitalize on. In the blog post, Brian Shaw, CFA and Justin Bourgette, CFA explained how the drop in inflation could provide just cause to utilize bond strategies to hedge risk in a portfolio.
“In addition to the potential diversification benefits of adding duration to fixed income portfolios, we also think it is prudent to gradually extend out the yield curve and risk spectrum in order to preserve today’s attractive yields,” Shaw and Bourgette added.
A Diversified Bond Strategy
Investors seeking to lock in income and mitigate portfolio risk may find value in the Eaton Vance Total Return Bond ETF (EVTR ). EVTR can bolster a portfolio’s core fixed income strategy with a diverse selection of fixed income securities.
Part of the fund’s diversification benefits comes from EVTR’s robust duration distribution. The fund holds a good mix of short and intermediate duration fixed income securities. Additionally, EVTR also has a smaller selection of of long duration securities. As such, the fund can capitalize on the income advantages of short duration bonds and the lower reinvestment risk of intermediate duration strategies.
EVTR’s diversity does not stop at asset duration, either. While the fund primarily holds investment grade bonds, a small selection of assets are allocated to high yield bonds. This allows the fund to function as a robust core asset while leveraging extra yield from junk bonds.
By delivering a mix of bond sectors, durations, and qualities for its investors, EVTR works well as a risk-adjusted core bond option. The fund’s prowess is further leveraged by its active management team, allowing EVTR to opportunistically chase timely yields while mitigating potential risk.
Currently, EVTR is generating stronger long-term results than the Agg is. As of September 27th, 2024, EVTR’s NAV has risen 14.4% over the last twelve months. Meanwhile the Agg has only risen 12.07%.
For more news, information, and analysis, visit The ETF Yield Channel.
