Uncertainty currently reigns supreme with investors and traders alike trying to anticipate where the economy is headed.
Fortune reported that a recent survey from Deutsche Bank found that 45% of investors see the U.S. economy reaching a “no landing” scenario. A “no landing” would leave inflation above the 2% target for the Federal Reserve, while growth remained strong. Interestingly, Fortune notes that 19% of investors told Deutsche Bank that they don’t know when the next U.S. recession will happen. That’s up 16% from last year’s findings.
With mounting confusion regarding economic expectations for 2024, it’s worth looking for investment options that could mitigate potential shifts down the line. In situations like these, ultra-short investing strategies can warrant consideration.
Ultra-Short Options
Morgan Stanley’s roster of ETFs includes multiple ultra-short investment options. One such fund is the Eaton Vance Ultra-Short Income ETF (EVSB). It is actively managed and prioritizes accruing income.
EVSB primarily invests in short-term securities, including floating-rate, fixed, and variable options. The wide majority of chosen securities for the fund are investment grade. However, the fund may invest up to 10% of net assets in junk bonds as well. The fund has a low net expense ratio of 0.17% and has seen net flows of over $17 million in the last three months.
Alternatively, investors may wish to consider the Calvert Ultra-Short Investment Grade ETF (CVSB), which incorporates ESG criteria into its evaluations of stocks. Like EVSB, CVSB is actively managed and allocates assets to investment-grade securities.
CVSB features a net expense ratio of 0.24%, also on the lower side. Up to half of net assets for the fund may be invested in asset-backed or mortgage-backed securities issued by agencies in the U.S. government. The fund may also direct up to 25% of investment into foreign debt securities. CVSB is currently up nearly 7% over the last 12 months.
Ultra-short options like CVSB and EVSB can provide notable security against potential interest rate shifts down the line. Both funds possess a low expense ratio and positive prospects of tax efficiency. So these ultra-short options could lead to good returns while the market waits for the Fed’s next move.
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