Many investors are still sitting on the sidelines in cash, missing out on current opportunities in short-duration bonds.
An ETF comprising short-duration bonds could help investors capture yield and generate income without taking on significant risk. The Natixis Loomis Sayles Short Duration Income ETF (LSST ) may be a compelling offering for investors looking for yield.
Advisors can potentially turn to actively managed short-term bond ETFs like LSST ahead of Fed rate cuts to benefit from potential price appreciation. Currently, LSST has a 30-day SEC yield of 5%.
See more: Will the Fed Cut Rates? A Midyear Outlook With Natixis
LSST provides a dynamic, active approach to sector allocation and security selection. The short-duration income ETF seeks current income consistent with the preservation of capital to pursue higher yield potential in short-duration bonds.
Why Investors Like Short-Duration Bonds
Short-duration credit tends to offer a higher yield than Treasury bonds of similar durations, creating a compelling investment opportunity for investors. However, although both are relatively low risk compared to equities, short-duration credit carries slightly greater credit risk and reduced liquidity compared to Treasuries.
Furthermore, short-duration exposure complements money market exposure in portfolios – meaning investors can ease back into the market without jumping out of cash too quickly. Investors can get a better yield with short-duration exposure than is typical of a money market fund, and it introduces diversification into portfolios.
A highly experienced team supported by Loomis Sayles’ credit and securitized research manages LSST. Notably, the investment team behind LSST is managing $100 billion globally, primarily for institutional investors.
Charging 35 basis points, LSST is a cost-conscious portfolio building block worth consideration.
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