Income-oriented investors have found it harder to generate yields in a low-rate environment.
As more look to alternative bond portfolio compositions to maximize income while maintaining lower risk exposure, investors can consider a smart-beta bond exchange traded fund strategy that seeks to enhance yields.
On the upcoming webcast, An Investment Grade ETF Strategy for Diversifying Income, Kevin DiSano, Managing Director and Head of ETF Sales at Nuveen, and Jordan Farris, Vice President and Head of ETF Product Development at Nuveen, will consider the potential risks ahead and delve into a fixed-income strategy that can help core bond investors potentially enhance returns.
For instance, the recently launched NuShares Enhanced Yield U.S. Aggregate Bond ETF (NYSEArca: NUAG), which tries to reflect the performance of the BofA Merrill Lynch Enhanced Yield U.S. Broad Bond Index, offers the potential for enhanced yield with the risk and credit quality profile of the broad investment-grade fixed-income market.
NUAG primarily consists of U.S. government debt securities, along with bonds issued by U.S. corporations, residential and commercial mortgage-backed securities, asset-backed securities and U.S. dollar-denominated debt securities issued by non-U.S. governments and corporations.
As opposed to traditional market capitalization-weighted methodology, the underlying index uses a rules-based methodology that allocates higher weights to securities and sectors with a higher potential yield while maintaining comparable risk.