The Federal Reserve has signaled its intent to keep interest rates near zero for the foreseeable future, forcing income-minded investors to seek alternative income-generating investments in a persistently low-yield environment.
In the upcoming webcast, How to Find Yield in a Low-Rate Environment, Jason Bloom, Director, Global Macro ETF Strategy, Invesco; and Brian McMullen, Fixed Income ETF Strategist, Invesco, will outline ways for investors to help bolster a fixed income portfolio in a low-rate environment.
For example, fixed-income investors can look to something like the Invesco Fundamental High Yield Corporate Bond ETF (NYSEArca: PHB) to focus on more quality high-yield corporate bonds. PHB, which tracks the RAFI Bonds US High Yield 1-10 Index, tilts towards slightly higher quality corporate debt securities than its major competitors. The ETF features no exposure to CCC-rated bonds. Three-quarters of PHB’s holdings are rated BBB or B.B.
Similarly, the Invesco Fundamental Investment Grade Corporate Bond ETF (PFIG), which tracks the RAFI Bonds US Investment Grade 1-10 Index, leans towards higher-quality corporate debt issues by utilizing the Fundamental Indexing methodology developed by Research Affiliates.
Investors can also look over overseas for income opportunities. Something like the Invesco Emerging Markets Sovereign Debt ETF (NYSEArca: PCY) includes exposure to the investment results of the DBIQ Emerging Market USD Liquid Balanced Index. PCY generally will invest in U.S. dollar-denominated government bonds from emerging market countries that comprise the underlying index. The underlying index PCY tracks measures potential returns of a theoretical portfolio of liquid emerging market U.S. dollar-denominated government bonds.
Lastly, the Invesco National AMT-Free Municipal Bond ETF (NYSEArca: PZA) may help investors diversify with municipal securities that are exempt from the federal alternative minimum tax. The underlying index is composed of U.S. dollar-denominated, investment-grade, tax-exempt debt publicly issued by the U.S. and territories, or their political subdivisions, in the U.S. domestic market with a term of at least 15 years remaining to final maturity.
Financial advisors who are interested in learning more about income-generating strategies can register for the Tuesday, September 1, webcast here.