Investors looking for lower-risk investment opportunities might want to consider some fixed-income exchange traded funds (ETFs). Because fixed-income ETFs are considered "safe," don’t expect high-flying returns you might get on a riskier ETF. Treasury securities have jumped in price recently because so many investors are seeking refuge in them amid the recent market volatility, explains Zoe Van Schyndel for The Motley Fool. As prices go up, yields go down. Inversely, as prices go down, yields go up.
An example of a fairly secure fixed-income ETF is the iShares Lehman 1-3 Year Treasury Bond (SHY). U.S. Treasury securities make up 98.5% of SHY, and it tracks the Lehman 1-3 Year Treasury Bond Index. For investors who want to be extra careful, choosing a shorter time frame for fixed-income ETFs is generally better because it’s less likely that something could go wrong in a short amount of time compared to the longterm.
For full disclosure, some of Tom Lydon’s clients own SHY.
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