Given President Donald Donald Trump’s campaign promises, the markets believe a Trump administration could foster growth and fuel inflationary pressures, adding to speculation that the Fed would hike interest rates to rein in an overheating economy.
Consequently, many expect higher yields and a steeper yield curve are on the horizon. While income seekers may welcome the prospects, bond market yields may continue to remain in the low end of the spectrum.
Many of VIG’s sector allocations could actually prove sturdy in a rising rates environment whereas some high dividend strategies could be vulnerable.
“VIG is run with an intelligent design and it emphasizes stronger companies. Even if the companies may be expensive today, it’s a good place for investors to buy in the event the market starts to decline and there’s a comfortable price point for entry,” according to a Seeking Alpha analysis of VIG.
For more on smart beta ETFs, visit our smart beta channel.