Safety of the Fixed-Income ETF | ETF Trends

Investors like it when the bull runs strong but when the stock market turns and charges the matador, as Joanne Von Alroth of Investor’s Business Daily puts it, many run for the safety of the fixed-income exchange traded fund (ETF). Individual bonds and bond funds are a familiar concept but a fixed-income ETF can offer even more stability. Bond ETFs are portfolios of bonds that track the performance of a bond or index, such as 20-year treasuries. They can be bought and sold like stocks and interest is captured through monthly dividends and any capital gains are paid out through an annual dividend. Although bond ETFs don’t mature, they can be shorted, traded on margin and hedged with options.

There are currently 14 fixed income ETFs available for investors offered through iShares.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.