After four decades of declining interest rates, bond ETF investors now face an uncertain environment. It’s time to consider new solutions to help you meet your fixed-income goals.
On the upcoming webcast (available live and on demand for CE Credit), Investing Beyond the Bond Benchmark, Edward Kerschner, Chief Portfolio Strategist for Columbia Threadneedle Investments, and Gene Tannuzzo, Senior Portfolio Manager of Strategic Income for Columbia Threadneedle Investments, will outline the potential risks in the current bond market and why investors should consider a multi-sector bond strategy to target consistent income.
For example, the recently added Columbia Diversified Fixed Income Allocation ETF (NYSEArca: DIAL) follows an alternative indexing methodology to potentially help bond investors generated improved returns and diminish the negative effects of sudden risks.
The new bond ETF tries to reflect the performance of the Beta Advantage Multi-Sector Bond Index, a rules-based multi-sector strategic approach to debt market investing. The underlying smart beta index covers six sectors of the debt market, focusing on yield, quality and liquidity.
“The fund’s disciplined investment approach has the potential to help generate consistent income — even in an uncertain interest rate environment,” according to Columbia Threadneedle Investments.
The underlying index tries to target the six sectors, including U.S. Treasury securities (10%); global ex-U.S. treasury securities (10%); U.S. agency mortgage-backed securities (15%); U.S. corporate investment grade bonds (15%); U.S. corporate high yield bonds (30%); and emerging markets sovereign and quasi-sovereign debt (20%), according to a prospectus sheet. Each sector is market value-weighted except for the global ex-U.S. Treasury Securities, which is equally weighted.
The Treasuries exposure has a remaining maturity of greater than seven years, are rated investment-grade and U.S. denominated.