With all the talk about inflation returning, advisors are keeping a close eye on how the Federal Reserve may respond.
On Wednesday, the Federal Reserve opted to keep interest rates at the same position they have been in since December. However, the committee did increase its projections for inflation this year.
Looking ahead, the Fed expects the U.S. economy to grow by 1.7% this year. Notably, this marks a 0.4% decline from the committee’s last reading in December.
Expectations still remain that the Fed could cut interest rates twice this year. However, economic uncertainty and potential tariff standoffs can make it difficult to be certain of anything within this market.
This can make it rather difficult to plan a fixed income strategy. Not only do investors need to be wary of inflation, they also need to be able to adapt to the Fed’s judgment calls.
Luckily, actively managed fixed income ETFs can be extremely helpful in these situations. Active fund managers can help investors adjust their portfolio exposures for offensive and defensive benefits.
For instance, check out the Eaton Vance Total Return Bond ETF (EVTR ). This actively managed ETF taps into Eaton Vance’s extensive fixed income expertise.
A core-plus holding, EVTR primarily allocates assets to a mix of investment-grade fixed income assets. This includes investment-grade credit, Treasuries, and mortgage-backed securities.
However, the fund taps into additional income through a tactical selection of high yield bonds. The traditional risk of high yield bonds is offset by the relatively low portfolio size, along with the supervision of active management.
With diversified sources of yield and an active portfolio team, EVTR can be in pole position to navigate the Fed’s rate regimen. If uncertainty mounts regarding the committee’s economic agenda, the fund will be in a good spot to deliver risk-adjusted results.
For more news, information, and analysis, visit The ETF Yield Channel.
