An ETF For Conservative Bond Investors With a Decent Yield | ETF Trends

Following the Federal Reserve’s recent interest rate cut, it’s reasonable to expect that investors are searching for some extra yield, but that some may not want to venture into more volatile corners of the fixed income market.

The FlexShares Ready Access Variable Income Fund (RAVI) can help fixed-income investors with risk-management, income generation and liquidity management. RAVI may be something for investors whom are looking for a little more yield than what’s provided by money market funds, but don’t want to move too far out of the short-duration end of the yield curve.

The $255.46 million RAVI holds 235 bonds and has a 30-day SEC yield of 2.44%, according to FlexShares data.

“FlexShares Ready Access Variable Income Fund (RAVI) seeks maximum current income consistent with the preservation of capital and liquidity,” according to the issuer.

Work With RAVI ETF

Relative to rival short-duration funds, RAVI is flexible in terms of allocations and that flexibility can enhance yield and long-term total returns.

The fund primarily invests in investment-grade debt securities with a heavy tilt toward U.S. corporate bonds. According to the fund prospectus, the ETF may also invest, without limitation, in fixed-income securities and instruments of foreign issuers in developed and emerging markets, including debt securities of foreign governments, and may invest more than 25% of its total assets in securities and instruments of issuers in a single developed market country. RAVI can hold up to 20% of its total assets in fixed-income securities and instruments of issuers in emerging markets.

Actively managed, RAVI is currently heavily allocated to short-term corporate bonds, but it also features modest weights to mortgage-backed securities, government debt and cash. Over 96% of RAVI’s holdings have maturities of up to one year or one to three years.

With an annual fee of just 0.25%, RAVI is cost-effective compared to other actively managed funds.

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