“I think the potential is there for maybe three interest-rate increases,” Stanley said. “A lot will be dependent on what goes on with the U.S. economy and how many things that Trump does as far as getting the U.S. economy gaining steam.”
Consequently, investors may turn to an actively managed bond ETF to better navigate the uncertain waters ahead. For instance, the broad Newfleet Multi-Sector Unconstrained Bond ETF (NYSEArca: NFLT) will target the right areas of the global bond market at the opportune times, implementing active sector rotation and disciplined risk management to achieve long-term excess returns.
The unconstrained investment style does not require a manager to adhere to a specific benchmark. Instead, unconstrained strategies allow a manager to focus on returns across many asset classes and sectors and the styles typically have a more long-term horizon. Moreover, a portfolio manager may use derivatives and other alternative asset classes to hedge market exposure.
The ETF will analyze value assessment of sectors to determine under- and overweights, along with interest rate outlook and sector allocation targets. Next, the team will look at fundamentals and assess credit risks, company management, issue structure and technical conditions. Lastly, the managers will select high-conviction picks across 14 sectors, without restrictions on speculative-grade or non-U.S. securities.
Additionally, the more recently launched Virtus Newfleet Dynamic Credit ETF (NYSEArca: BLHY) will provide a high level of current income and capital appreciation by combining two converging credit sectors, high-yield corporate bonds and floating bank loans. By actively managing the portfolio, Newfleet is able to allocate between both asset classes at any ratio within the fund. Additionally, should market conditions merit a temporary exit from credit, the fund can allocate as much as 100 percent to U.S. Treasuries.