On the other hand, Schneider argued that fixed-income investor can protect against the potential upcoming rate-induced volatility through short duration actively managed bond funds, such as the PIMCO Low Duration Active ETF, (NYSEArca: LDUR) and the PIMCO Enhanced Short Maturity Active ETF (NYSEArca: MINT).
LDUR comes with a short 1.4 year duration, so a 1% rise in interest rates would only translate to about a minimal 1.4% decline in the fund’s price, and it shows a 1.56% 30-day SEC yield. The ETF largely includes investment-grade debt, but potential investors should be aware that the active ETF includes a hefty 52.7% tilt toward investment-grade corporate debt, followed by 24.9% U.S. government debt, 7.7% other short term duration instruments, 4.6% mortgage and 4.0% high yield credit.
Additionally, MINT is meant to be used as an incremental step outside of the money market funds. Investors would use the active ETF for capital preservation or to take a defensive view on the market. MINT shows a 0.3 year duration and a 1.21% 30-day SEC yield. The fund only includes investment-grade debt, but most of it is in investment-grade credit 67.4%, followed by mortgage 15.3%, other short-duration instruments 10.0 and emerging markets 2.8%.
For more information on the fixed-income market, visit our bond ETFs category.