Fixed-income exchange traded funds (ETFs) are trying to catch up to their stock-fund cousins; but will the pullback in the bond market mixed with Treasury yields hitting multi-year highs hurt their chances? Yields on the 10-year Treasury recently passed the 5% mark and touched 5-year highs as bond prices lost ground due to their opposing moves to yields. John Spence of MarketWatch.com reports the recent upheaval in bond markets shouldn’t deter ETF producers from launching fixed-income funds in the works. Considering the size of the fixed-income market, there is still room for growth. Bond ETFs are popular for an individual investor because they have low expense ratios and indexed bond ETFs reduce the need to continually buy and sell bonds to maintain a targeted maturity. However, there is concern over the need to trade bonds throughout the day, especially since their prices don’t move as much as their equity counterparts.
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.