FMD Capital Management

Posts Tagged: shy

The 3 Biggest Treasury Bond ETFs And How To Use Them

Written by David Fabian, April 18th, 2017

Treasury bonds continue to be a stalwart position among income investors and those who opt for credit quality over yield or other characteristics of fixed-income.  Treasuries benefit from the highest credit rating possible and are backed by the full faith of the U.S. Government.  They are also the most directly susceptible to interest rate fluctuations and would perform poorly during a secular period of rising rates.

One attractive way to own Treasury bonds is through a diversified exchange-traded fund (ETF).  This vehicle creates the flexibility to directly hone in on a certain maturity or index methodology in an extremely low-cost and liquid package.

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Mapping The Treasury ETF Yield Curve

Written by David Fabian, August 26th, 2014

One of the most obstinate trends of 2014 has been falling interest rates, which translates into higher prices for U.S. Treasury ETFs. At the end of 2013, nearly every economist and equity bull was predicting higher interest rates as a function of money rotating out of fixed-income and into stocks. However, the bearish sentiment for bonds became so one-sided that many investors started to see tremendous value in this beaten down asset class.

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Not All Short-Term Bond ETFs Are Cut From The Same Cloth

Written by David Fabian, July 08th, 2014

The popularity of short-term bond ETFs has continued to gain steam in 2014. In the wake of Federal Reserve taper fears and rising interest rates last year, many fixed-income investors flocked to these low duration funds in an attempt to shelter their portfolios from decline.

Short-term bond funds are considered attractive in a rising rate environment because of the inverse relationship between bond prices and bond yields. A fund with a lower overall duration will have a concomitant reduction in its total yield and less sensitivity to interest rates.

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Treasury ETFs Diverge in Two Fundamental Directions

Written by David Fabian, March 25th, 2014

Janet Yellen really shook things up last week in markets with her remarks about timelines for policy tightening by the Federal Reserve. The initial reaction prompted a sell-off across the board in stocks, bonds, and gold as investors digested the data with uncertainty. However, subsequent trading days saw stabilization in equities and interest rates with the start of a more meaningful divergence in the yield curve.

The real beneficiary of the Fed’s statements has been long-term Treasury bonds, as evidenced by the rise in the iShares Barclays 20+ Year Treasury Bond ETF (TLT). This widely followed fund has now tested a similar level three times in 2014 and may ultimately break out to new highs on this recent move. Long-term bonds were badly beaten down during 2013 and have come roaring back this year as investors look to hedge their equity bets and rebalance their portfolios to include a slug of fixed income as a safe-haven asset class.

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