Legendary investor Ray Dalio of Bridgewater Associates doesn’t advise investors to jump into safe haven government debt. Granted, there was a lot of jumping into Treasury notes amid the coronavirus-induced equities sell-off, which subsequently drove yields down to bottom-feeding levels.
With the government injecting copious amounts of dollars into the economy via stimulus measures, this is where Dalio advises investors to stay away from government bonds, even with a long-term horizon in mind.
“This period, like the 1930-45 period, is a period in which I think you’d be pretty crazy to hold bonds,” Dalio said Wednesday on the Bloomberg Invest Talks webcast. “If you’re holding a bond that gives you no interest rate, or a negative interest rate, and they’re producing a lot of currency and you’re going to receive that, why would you hold that bond?”
Nonetheless, despite the economic effects of the pandemic, there have been some asset classes that have been benefitting, according to Dalio. Per a Bloomberg article, Dalio cited “gold and certain stocks, especially those of companies with strong balance sheets, as some of the ‘beneficiaries.’”
With the Federal Reserve stepping in to purchase corporate bonds to help keep the economy afloat, one ETF to consider is the Goldman Sachs Access Investment Grade Corporate Bond ETF (GIGB). GIGB seeks to provide investment results that closely correspond to the performance of the FTSE Goldman Sachs Investment Grade Corporate Bond Index.
The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index. The index is a rules-based index that is designed to measure the performance of investment grade, corporate bonds denominated in U.S. dollars that meet certain liquidity and fundamental screening criteria.
For a high yield option, take a look at the Goldman Sachs Access High Yield Corporate Bond ETF (GHYB). GHYB seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Goldman Sachs High Yield Corporate Bond Index.
The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index. The index is a rules-based index that is designed to measure the performance of high yield corporate bonds denominated in U.S. dollars that meet certain liquidity and fundamental screening criteria.
This article originally appeared on ETFTrends.com.
