Even though many fixed income strategies are seeing good results, some investors remain uncertain over where bond yields are heading. Luckily for the uncertain, evidence is mounting that the yield curve is normalizing. That’s according to the Eaton Vance team, who discussed the state of the yield curve during this month’s edition of The BEAT.
“As supply chains normalize along with the U.S. economy, so should the yield curve. A normal slope of the 2s -10s UST yield curve is 50-75 basis points (bps),” the Eaton Vance team assessed. “So, if the UST 2-yr stays anchored around 4.25%, consistent with pricing of 1-2 Fed cuts this year, then we think the UST 10-yr yield will be range bound between 4.75 and 5%. If you think the Fed cuts 0-1 times, then the 10-yr yield could peak in the 5 – 5.25% range, and so forth.”
All in all, this analysis highlights how and why investors could bet on the yield curve normalizing down the line. As such, traders may want to stick to tried-and-true fixed income strategies to benefit from such a move.
Tapping Into EVTR's Track Record
For instance, one strategy that may be worth considering is the Eaton Vance Total Return Bond ETF (EVTR ). With a five-star rating from Morningstar, EVTR is an actively managed core plus bond fund.
Broadly speaking, EVTR mainly invests in a mixed portfolio of fixed income securities. This includes a blend of Treasuries, mortgage-backed securities, and investment-grade credit, among others.
That said, the fund will also opportunistically invest in high yield bonds. These junk bonds can help the ETF lock in strong opportunities and potentially outperform traditional investment-grade strategies.
Time and again, EVTR’s strategy has shown that it can provide compelling results. As of February 18, 2025, the fund has a subsidized 30-day SEC yield of 4.81%.
The fund’s results don’t simply stop with its income potential, either. Its NAV has risen a little over 6.5% during the last year, as of February 19, 2025. Notably, this is more than 2% higher than the returns of the Agg.
For more news, information, and analysis, visit The ETF Yield Channel.
