More investors are looking to so-called smart beta or factor-based indexing methodologies to enhance their equity portfolios while diminishing their downside risk exposures. These same practices found in smart beta equity strategies may also be applied to the fixed-income side.
On the upcoming webcast, Building Blocks for Your Fixed Income Portfolios, Steve Sachs, Head of Capital Markets, ETFs at Goldman Sachs Asset Management, and Diana Sands, Vice President, US and Global Fixed Income for Goldman Sachs Asset Management, will outline what makes smart beta investments tick and consider how factors can work in a fixed-income portfolio to better help investors diversify their bond exposure.
For example, the Goldman Sachs Access Investment Grade Corporate Bond ETF (NYSEArca: GIGB) is a factor-based strategy that employs fundamental screens. The bond ETF tracks the FTSE Goldman Sachs Investment Grade Corporate Bond Index and only holds bonds with at least one year to maturity and a minimum rating of BBB-. GIGB also applies a fundamental screen to measure issuers by operating margin and leverage. Specifically, the ETF targets quality bonds while employing metrics such as ear-over-year change in profit (EBIT) margin and debt/enterprise value.
The Goldman Sachs Access High Yield Corporate Bond ETF (GHYB) also tracks an index that employs a simple, transparent process to identify an investible universe, then eliminates issuers with relative deteriorating fundamentals to offer exposure to existing sector or market beta. The smart beta approach should provide liquidity while minimizing exposure to factors historically associated with volatility and underperformance.
Lastly, the Goldman Sachs Access Ultra Short Bond ETF (GSST) provides exposure to a broad universe of ultra short duration, high quality fixed income securities. The ETF tries to generate potentially higher returns relative to traditional money market funds while seeking to preserve capital.
Financial advisors who are interested in learning more about fixed-income investment strategies can register for the Wednesday, June 26 webcast here.