With memories of Monday’s sell-off fresh on investors’ minds, all eyes remain fixated on the Federal Reserve’s next moves.
At a recent event in Hawaii, San Francisco Fed President and CEO Mary Daly reiterated that within the Federal Reserve, minds remain "quite open to adjusting the policy rate in coming meetings.”
Additionally, Daly pushed back against concerns that the recent jobs report data may indicate recession risk: “Underneath the hood of the labor market report, there’s a little more room for confidence — confidence that we’re slowing, but not falling off a cliff. This is what we would expect.”
Officials are indicating the Fed may be staying the course. But investors may look to mitigate risk from potential shifts in interest rates. Situations like these are where ultra-short-duration bond ETFs can thrive.
By using an ultra-short bond ETF, investors can lock in strong returns and price appreciation from current interest rates. This can be an effective strategy for those looking to put their money to work while they wait for the U.S. economy to cool down further.
An Active Ultra-Short Option
One such fund is the Calvert Ultra-Short Investment Grade ETF (CVSB ). The ETF is an actively managed bond fund with a net expense ratio of 0.24%.
Primarily, the fund invests in short-term investment-grade bond securities, including fixed, variable, and floating rate options. CVSB aims to keep its average portfolio duration at one year or less.
The fund can be used as a risk-mitigated method to lock in returns ahead of interest rate cuts. By investing in investment-grade securities, CVSB helps investors shield themselves from default risk.
With change on the horizon for rates and the greater U.S. economy, it helps to have an active strategy. By employing an active management team, CVSB can better position itself to capitalize on rate moves and current economic trends.
By examining CVSB’s fund flows, one can see how investors are increasingly turning to put their cash to work in the ETF. As of August 5, 2024, FactSet data finds that CVSB saw over $17.6 million in net flows over the last month.
CVSB has been able to provide investors with steady gains to its market price. As of August 5, 2024, the fund’s market price has risen about 1.1% over the last month, while gaining 7.2% over the last year.
For more news, information, and analysis, visit The ETF Yield Channel.
