Controlling Your Duration with Innovative ETFs
Written by Michael Fabian, September 11th, 2013
The volatility in interest rates this year has been particularly troublesome for fixed-income investors. Much of the jump in long-term Treasury bond yields has been due to the quicker than expected improvement in the labor market, thereby putting pressure on the Federal Reserve to begin tapering its asset purchase programs in 2013. The unrelenting rise in stock prices combined with investors pouring assets into equity-oriented funds at a breakneck pace has also put downward pressure on the fixed-income sentiment. This has been a wakeup call for investors to begin paying closer attention to their fixed income holdings, and examine them for potential weaknesses. Investors that own traditional “core” fixed income funds now face a unique set of challenges: continue to hang on as rates creep higher and indexes ultimately rotate to higher yielding bonds, or sell and forego the cash-flow benefit of fixed income altogether?