A Fixed-Income ETF Option to Approach a Rising Rate Environment

For example, the actively managed Guggenheim Total Return Bond ETF (NYSEArca: GTO) utilizes a multi-sector strategy and primarily holds investment-grade fixed-income securities across multiple sectors to help investors navigate the fixed-income market in a rising interest rate environment ahead.

GTO includes a hefty 25.5% tilt toward investment-grade bonds, followed by asset-backed securities 16.6%, U.S. Treasuries & Agencies 9.3%, military housing bonds 6.7%, agency commercial mortgage backed securities 6.5% and municipal bonds 6.1%.

The portfolio managers will try to generate alpha through duration management, relative valuation, credit analysis, information premiums and trade executions.

The actively managed Guggenheim bond ETF will be better able to shift holdings based on the current market environment, as opposed to traditional fixed-income benchmarks, which are heavily tilted toward low-yielding government-related debt – specifically, the Barclays Aggregate Bond Index holds about two-thirds of its portfolio in the low-yielding debt.

The Total Return Bond ETF shows a 2.69% 30-day SEC yield, 4.75 year average duration and a 0.50% expense ratio.

For more information on the fixed-income market, visit our bond ETFs category.