The heavy equity approach may not help investors gain outsized returns either, since valuations are either at or above fair market value, with a lower return-risk ratio of 0.5.
Some have also turned to floating rate debt, such as iShares Floating Rate Bond ETF (NYSEArca: FLOT), which automatically adjust at periodic intervals in response to changes in the interest rates. However, Mark Haefele, global chief investment officer at UBS Wealth Management, argues that these types of assets do little to provide diversification. [Bond ETF Strategies to Shield Against Rising Rates]
Consequently, the analyst argues that a 50% U.S. investment-grade fixed-income and 50% U.S. equity portfolio would provide the best risk-adjusted return, with a 5.9% return, a 7.9% volatility and a given return-risk of 0.7.
For more information on the fixed-income market, visit our bond ETFs category.
Tom Lydon’s clients own shares of LQD.