Bond ETFs & Income Generation

Investors are worried about income generation and volatility in the equities market. However, ETFs can help investors diversify and augment yields in their portfolios.

According to a Guggenheim survey, 72% of respondents are concerned about the impact of fixed-income yields on their portfolios.

“Investors are looking for unique and innovative ways to find potential income given the volatile market and ETFs fill a void in an investor’s toolkit for a range of applications—from replacing gaps created by maturities or, called bonds to managing cash flow needs, and to customizing a portfolio’s duration profile,” William Belden, Managing Director, Product Development at Guggenheim Investments, said in a note.

Additionally, many of the surveyed investors are optimistic about the future of fixed income. About 29% of respondents like high yield, 27% like emerging markets and 25% like investment grade as areas for the most opportunity in a rising yield environment. [ETFs for Rising Rates]

“For investors looking to save for life events such as retirement, defined-maturity products could be attractive, given the current volatile economic environment,” Belden added. “With increasing education initiatives around ETFs, more advisors are looking to them as a potential investment vehicle to help their clients reach their investment goals.”