Earlier this year, many industry observers and investors were expecting an imminent slowdown with markets. But with rates coming back down and the risk outlook improving, the outlook on fixed income has improved. So, investors could take on not only more credit, but also more risk. At least, according to Invesco’s head of fixed income and alternatives ETF product strategy Jason Bloom.
“Credit looks pretty good,” Bloom said Thursday on a panel on VettaFi’s Market Outlook Symposium. “Now might be a good time to take on more credit.”
"Don't Make The Same Mistake Next Year"
On the panel, Bloom said that investors generally were underweight fixed income this year. But with yields where they are now, and fears of a recession subdued, that would be an error in 2024.
“Don’t make the same mistake next year,” he warned, adding that this makes now the perfect time for adding risk.
And it appears that advisors agree. According to a poll conducted during the panel, 42% of responding attendees said they plan to take on more credit and more duration heading into 2024.
A Few Strong ETF Options in Today’s Credit Environment
But while Bloom said he’s “neutral on duration,” he suggested a few ETFs in Invesco’s fund suite that would serve investors well in this current environment.
The first one was the Invesco BulletShares 2025 High Yield Corporate Bond ETF (BSJP ). As its name suggests, BSJP invests in U.S.-dollar-denominated high yield corporate bonds that mature in 2025.
The second fund Bloom mentioned was the Invesco Total Return Bond ETF (GTO ), an actively managed intermediate bond fund. GTO will invest in fixed income instruments of varying maturities and of any credit qualities.
Bloom said that high volatility made the last few years very difficult for active management. But with volatility having now moderated a bit, it’s a good environment for GTO to shine.
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