Bond ETFs Help Manage Risk, Enhance Yield Generation | ETF Trends

When looking at optimal fixed-income allocations, financial advisors are considering ways to incorporate ETFs to diminish overall portfolio risks better and enhance yield generation.

“When you think about the returns that global fixed-income has produced over the last call-it five-years, it’s not normal, right? So, fixed-income first and foremost in a portfolio in an asset allocation is a risk-mitigant, and it’s an income generator. That’s the conversation that advisors want to have, particularly given all the flows that we saw on the fixed-income ETFs in 2019. Every conversation we’ve had in the fourth quarter and the first quarter – they want to understand what do I do in fixed-income, how do I think about better positioning the client portfolio,” Steve Sachs, Head of ETF Capital Markets, Goldman Sachs Asset Management, said at the Inside ETFs conference.

Goldman Sachs offers a suite of bond ETFs to help investors diversify with targeted fixed-income exposures, including Goldman Sachs Treasury Access 0-1 Year ETF (NYSEArca: GBIL) and Goldman Sachs Access Inflation Protected USD Bond ETF (Cboe: GTIP) as part of the rate markets strategy, along with the Goldman Sachs Access Investment Grade Corporate Bond ETF (NYSEArca: GIGB), Goldman Sachs Access High Yield Corporate Bond ETF (GHYB) and Goldman Sachs Access Ultra Short Bond ETF (GSST) as part of their credit markets offering.

The two rate market strategies screen underlying holdings based on technical indicators and remove securities that fail the screen. Meanwhile, the three credit market strategies take on screens to sift through fundamental indicators, removing the bottom ranking bonds.

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