Risk Management: Ultra-Short Duration Bond Strategies | ETF Trends

Given the interest rate outlook and risks associated with an aging bull equity market, more investors are looking to the short-end of the yield curve in the fixed-income market to hedge risks and still generate some decent returns.

On the upcoming webcast, Risk Management: Ultra-Short Duration Bond Strategies, Samantha Azzarello, Vice President, Global Market Strategist at J.P. Morgan Asset Management, and Alexander Nobile, Vice President, Investment Specialist for J.P. Morgan Asset Management, will take the pulse of the current market conditions and look to an ultra-short duration bond strategy to help financial advisors protect their portfolios.

Specifically, the actively managed JPMorgan Ultra-Short Income ETF (JPST) has become a popular way to access the short-end of the yield curve. The ultra-short duration bond strategy leverages the expertise of J.P. Morgan’s Global Liquidity business. In a rising interest rate environment, investors are looking for a safe way to park their cash and reduce risk exposures, and with something like JPST, investors can utilize an innovative solution to build stronger portfolios. The ETF shows a 2.90% 30-day SEC yield.

JPST will try to provide current income while seeking to maintain a low volatility of principal by investing in investment-grade, U.S.-dollar-denominated short-term fixed, variable and floating rate debt. The fund can include corporate securities, asset-backed securities, mortgage-backed and mortgage-related securities, and high quality money market instruments such as commercial paper and certificates of deposit.

The active ETF may also invest in U.S. Treasury securities, including Separate Trading of Registered Interest and Principal of Securities (STRIPS), securities issued or guaranteed by the U.S. government or its agencies and instrumentalities, securities issued or guaranteed by foreign governments, repurchase agreements, when-issued securities, delayed delivery securities, forward commitments, zero-coupon securities and privately placed securities, according to a prospectus sheet.

The ETF will normally focus investments in the banking industry or hold more than 25% of assets in securities issued by companies in the banking industry. The fund, though, may also invest less than 25% of assets in this industry as a temporary defensive measure.

The bond ETF will seek to maintain a duration of one year or less, but it may be exposed to duration longer than one year under certain market conditions such as periods of significant volatility in interest rates and spreads.

Financial advisors who are interested in learning more about short-duration bond strategies can register for the Tuesday, March 5 webcast here.