As inflation rears its ugly head, investors are beginning to worry about the outlook for real rates in fixed income portfolios. Yet alternative options, even in the high-risk space, are not plentiful.
In the upcoming webcast, Bonds as a Ballast: A Renewed Case for the 60/40, Andrew J. Patterson, Senior Economist, Vanguard; and Matthew Sheridan, Investment Consultant, Vanguard, will discuss the range of investment choices available to financial advisors.
For example, Vanguard’s most popular bond ETF play, the Vanguard Total Bond Market Index Fund ETF Shares (BND), provides exposure to a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States, including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.
Bond investors can use BND as a traditional hedging component when the equities market goes awry. Short-term traders can also use the ETF given its dynamic ability to be bought and sold quickly in the open market.
The Vanguard Interim-Term Corporate Bond ETF (VCIT) provides a more targeted play to includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility, and financial companies, with maturities between 5 and 10 years.
For a pure-play on the debt markets overseas, there’s the Vanguard Total International Bond Index Fund ETF Shares (BNDX). BNDX seeks to track the performance of a benchmark index that measures the investment return of non-U.S. dollar-denominated investment-grade bonds. The ETF employs an indexing investment approach designed to track the performance of the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged), which provides a broad-based measure of the global, investment-grade, fixed-rate debt markets. Additionally, it employs hedging strategies to protect against uncertainty in exchange rates.
Financial advisors who are interested in learning more about bond strategies can register for the Tuesday, July 27 webcast here.