The capital markets are on edge as recession signals are flashing their hazard lights. In particular, the threat of stagflation could push more investors to safe havens like bonds and push yields higher.
It’s already a difficult market landscape to navigate with a veil of uncertainty over the economy. While the economy is recovering from the effects of the pandemic, it could be running too hot with inflation on the move.
Already, talks of inflation are circulating in the capital markets. Stagflation refers to an economic environment where inflation is high and growth is stagnating, as was seen in the 1970s.
Whether the economy will reach that level of stagflation is debatable. However, with consumer prices rising, especially with regard to energy costs, the idea could be closer to reality than some think.
“Our base case is still not 1970s stagflation, but we’re getting closer to that ZIP code,” said Anders Persson, Nuveen’s chief investment officer of global fixed income.
Get Active With Yield
One way to get more yield is to use an exchange traded fund (ETF) with an active management strategy. One such fund to consider is the T. Rowe Price Total Return ETF (TOTR).
TOTR 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 income and price appreciation.
For an active management strategy, the fund comes with an expense ratio of 31 basis points.
For more news, information, and strategy, visit the Active ETF Channel.