With uncertainty and tariff concerns roiling the equity markets, many investors are looking to fixed income as a safe haven.
That said, investors should carefully consider which sectors of fixed income they choose to allocate assets toward. Should the inflation narrative play out, some fixed income sectors may be in a better position to respond than others.
The Eaton Vance team offered a solution to this quandary in the March edition of The BEAT. In the report, Eaton Vance’s experts make the case for moving underweight in bond duration.
“We have shifted portfolios to a modest underweight in duration, but we may continue to reduce,” the report noted. “This is because 1) we hold a view that the yield curve may continue to steepen and 2) pro-growth fiscal policy is unfolding alongside tariffs, tilting the scales towards slightly higher inflation.”
Moving toward shorter-duration bonds can very well be the opportune decision at the moment. Uncertainty over inflation and the Fed’s rate regimen could add more risk to longer-duration bond strategies down the line.
EVSD Offers Actively Managed Short-Duration Potential
Taking this all into consideration, investors might want to take a look at an active short-duration bond ETF like the Eaton Vance Short Duration Income ETF (EVSD ). The fund offers returns through a diversified selection of short-duration fixed income securities.
As an actively managed fund, EVSD routinely taps into the expertise of Eaton Vance’s fixed income portfolio team. The fund managers carefully choose assets through a blend of top-down and bottom-up investment approaches. This can allow investors who are uncertain about the bond market to better navigate any inflationary risks.
With an effective duration of 2.29 years, EVSD’s portfolio contains a broad mix of fixed income securities. This includes particularly notable exposure to investment grade credit, treasuries, and asset-backed securities.
So far, Eaton Vance’s investment strategy has paid off with solid results. As of March 14, 2025, the fund has a subsidized 30-day SEC yield of 4.95%.
These results help make the case for why investors are continuing to turn to this fund. FactSet data showcases that EVSD has seen over $20 million in net flows since February 14, 2025.
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