In addition to diminishing yields, an uncertain monetary policy outlook is adding to heightened market volatility.
In the upcoming webcast, Innovative Bond Strategies for a Low Yielding World, Ken Sommer, Managing Director, Head of Investment Grade Portfolio Management, New York Life Investments; Alexandra Wilson-Elizondo, Director, Portfolio Manager—Global Fixed Income, MacKay Shields; and John Lawlor, Director, Portfolio Manager/Trader, MacKay Municipal Managers, will present innovative approaches to bond investing to help advisors navigate current market risks and potentially find attractive yields.
For example, the the IQ S&P High Yield Low Volatility Bond ETF (NYSEARCA: HYLV) can reduce some of the gyrations associated with junk bonds while providing high-yield exposure. HYLV tracks the S&P U.S. High Yield Low Volatility Corporate Bond Index, which is designed to measure the performance of U.S. high yield corporate bonds with potentially low volatility.
According to S&P Dow Jones Indices, the underlying index delivers higher risk-adjusted returns than the underlying broad-based benchmark through mitigating uncompensated credit risk. Additionally, back-tested index performance show the efficacy of the low volatility strategy, with reduced return volatility and drawdowns in stressed conditions.
Alternatively, investors can also diversify beyond traditional aggregate bond exposure with municipal bonds. New York Life Investments in partnership with IndexIQ offers two actively manage muni bond ETFs: IQ MacKay Shields Municipal Intermediate ETF (NYSE Arca: MMIT) and the IQ MacKay Shields Municipal Insured ETF (NYSE Arca: MMIN). The two actively managed muni bond strategies could better help investors navigate changing market conditions. MMIT invests primarily in investment grade municipal bonds. MMIN principally invests in investment-grade municipal bonds covered by an insurance policy guaranteeing the payment of principal and interest.
MMIT seeks current income exempt from federal income tax. The ETF invests primarily in investment grade municipal bonds and will also seek to enhance total return potential through the subadvisor’s active management approach.
MMIN also seeks current income exempt from federal income tax. Additionally, the ETF principally invests in investment-grade municipal bonds covered by an insurance policy guaranteeing the payment of principal and interest, and will seek to enhance total return potential through the subadvisor’s active management approach.
The two strategies both seek to maintain 100% of assets in investment-grade munis diversified across states and sectors with a duration neutral approach, an expected annual turnover of 20% to 30% and no leverage exposure.
Financial advisors who are interested in learning more about innovative bond strategies can register for the Wednesday, September 25 webcast here.