A Bond ETF to Strengthen Your Core | ETF Trends

As the bond markets strengthen, investors can consider a fixed income exchange traded fund strategy to prop up their core.

The bond markets advanced after the Federal Reserve offered an optimistic outlook on the economic recovery and offered no signs of changes to its monetary policy at the end of its latest meeting, the Financial Times reports.

Federal Reserve chair Jerome Powell reaffirmed the need for continued monetary policy support until the U.S. labor market recovers from the coronavirus pandemic.

“We’ve had one great jobs report, it’s not enough,” Powell said.

Meanwhile, the equity markets are pulling back after their record-setting rally that was fueled by strong quarterly earnings. A surge in Covid-19 cases in Brazil and India along with signs of weakening in China’s manufacturing sector have weighed on sentiment.

“That is where the market is, wrestling between those two [factors],” Edward Park, chief investment officer at Brooks Macdonald, told the Wall Street Journal.

High-flying growth stocks have led the recent charge in the equity markets after big tech scored big earnings last week.

“I think we are overdone. I don’t think all of these gains are going to continue and that the optimism is going to go beyond what’s reasonable to expect,” Mike Zigmont, head of trading at Harvest Volatility Management, told Reuters.

Investors looking to strengthen their fixed income strategies can look to the Avantis Core Fixed Income ETF (AVIG), which invests in a broad set of debt obligations across sectors, maturities, and issuers. AVIG pursues the benefits associated with indexing, such as diversification and transparency of exposures. Yet the fund also has the ability to add value by making investment decisions using information embedded in current yields.

The Avantis Core Fixed Income ETF’s investment process uses an analytical framework, which includes an assessment of securities’ expected income and capital appreciation, to seek securities with high expected returns.

For more news, information, and strategy, visit the Core Strategies Channel.