Looking to add income to personal or client portfolios? The economy may be humming along steadily, but that doesn’t mean investors can’t benefit from current income. Indeed, both inflation and deferred rate cuts speak to the merits of steady income in a portfolio. That said, finding the right strategy matters. A short duration ETF like LSST, for example, may offer one strong option worth considering.
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The Natixis Loomis Sayles Short Duration Income ETF (LSST) charges 35 basis points for its approach. The fund actively invests, seeking capital preservation on top of income. It does so by looking for short duration fixed income products with maturities of about one to three years. LSST primarily holds investment-grade corporate bonds and variable and floating-rate securities.
The short duration ETF has the ability to invest outside the U.S., too, while also potentially allocating to high yield opportunities. Its active managers also consider macroeconomic and sector analyses as part of its efforts.
The active, short duration approach may stand out, especially given the uncertainty around interest rates. Investors may have previously been concerned about imminent cuts and, therefore, avoided certain fixed income products. Now, with cuts further and further away, a short duration strategy may appeal by comparison.
According to VettaFi data, LSST has returned 2.2% over the last five years, which helped the strategy outperform its ETF Database Category and FactSet Segment averages during that time.
Building a portfolio requires all kinds of fixed income allocations, from core to short duration holdings and more. LSST presents one strong option for doing so. With current income potentially a crucial part of a 2024 strategy, investors may want to take a closer look at the strategy.
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