As Treasury Yields Spike, Get Total Return on Your Fixed Income Portfolio

Treasury yields have been pushing higher as of late as market fears surrounding geopolitical uncertainty may be easing and risk-on sentiment returns back to the markets. Benchmark Treasury yields have been reaching levels again not seen since 2019.

According to a Wall Street Journal report, market sentiment may be showing that Russia’s invasion of Ukraine won’t have too much of a material impact on the U.S. Federal Reserve’s hawkishness. As such, a sustained push towards higher interest rates could continue throughout the year.

Fears of stagflation were already entering the markets as investors fretted that out-of-control inflation would starve growth. While that sentiment still remains amid market uncertainty, the prevailing notion is that the Fed should continue to tighten its monetary policy as planned.

In the meantime, rising yields are making for a tricky bond market to navigate.

“Rising bond yields are likely to be disappointing to many investors, pushing up borrowing costs across the economy and giving investors few places to hide if they are nervous about holding riskier assets such as stocks,” the Wall Street Journal notes.

“This year has been particularly difficult because prices of both stocks and bonds have fallen, making it difficult for savers to earn positive returns regardless of their investment strategy,” the WSJ adds.

Get Active With Return

One way to navigate the current market in order to get maximum yield is through the actively managed T. Rowe Price Total Return ETF (TOTR). The fund seeks to offer maximum returns for investors primarily through income, as well as capital appreciation by investing in a diverse set of bonds and debt instruments.

TOTR is constructed to be flexible in changing market conditions while still seeking strong returns. The fund primarily invests in U.S. intermediate-term bonds but has the freedom to purchase bonds from across the global opportunity set and maturity spectrum.

Examples might include debt securities issued by the U.S. government and its agencies, corporate bonds, bank loans, and various types of mortgage-backed and asset-backed securities. TOTR is ideal for the investor looking for total returns via price appreciation as well as income.

For more news, information, and strategy, visit the Active ETF Channel.