Is It Time To Add Fixed Income To Your Portfolio? | ETF Trends

The FlexShares Ready Access Variable Income Fund (RAVI) offers investors varied fixed income exposure in a low-cost, actively managed ETF. 

RAVI is one of several short-term debt funds aimed at investors who want to preserve capital while wringing out a bit more income than they can get from Treasuries. The portfolio team behind RAVI looks for short-term investment-grade debt, including public and private securities from the U.S. and non-U.S. issuers, according to ETF Database.

The actively managed fund has an expense ratio of 25 basis points. Incepted in 2012, RAVI has $503 million in assets under management. 

RAVI seeks maximum current income consistent with the preservation of capital and liquidity. The fund seeks to achieve its investment objective by investing at least 80% of its total assets in a non-diversified portfolio of fixed income instruments, including bonds, debt securities, and other similar instruments issued by U.S. and non-U.S. public and private sector entities.

RAVI is an ideal product for investors looking for a little more yield than what’s provided by money market funds but doesn’t want to move too far out of the short-duration end of the yield curve. 

The Right RAVI Position

RAVI’s active management strategy means that its fund managers can get in and out of income-producing positions in a dynamic manner, allowing investors to stay dialed into the market.

“In our view, the variety of fixed-income assets available to the NTI investment team provides flexibility to manage the FlexShares Ready Access Variable Income Fund’s (RAVI) duration and liquidity according to their outlook for interest rates and market conditions,” FlexShares wrote in a Fund Focus article.

Furthermore, active management can identify opportunities while targeting a duration specific to meeting the twin goals of maximum yield and minimal volatility.

“Targeting durations above the three-month cap on money market funds, but below the 1.5-year minimum duration typically offered by short-term bond funds, may provide higher returns than money market funds while limiting the potential for principal volatility,” the Fund Focus added.

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