The fixed income market was one of the stars in a pandemic-ridden 2020, especially when the Federal Reserve came in to backstop bonds earlier this year when the COVID-19 sell-offs were at their peak. As ETF investors look to position their portfolios for 2021, getting bond exposure is still a must. Here are three strong contenders that give investors tactical exposure to the debt markets.
With Thanksgiving around the corner, these three funds offer the ETF investors a cornucopia of bond exposure in floating rate bonds, municipal bonds, and green bonds, which is an area rising in popularity. Floating rate bonds address a potential rise in rates, municipal bonds can take advantage of potential tax hikes under Joe Biden’s presidency, and green bonds capitalize on environmental, social and governance (ESG) investing.
VanEck Vectors Investment Grade Floating Rate ETF (FLTR): Seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS® US Investment Grade Floating Rate Index (the “Floating Rate Index”). The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index. The index is comprised of U.S. dollar-denominated floating rate notes issued by corporate entities or similar commercial entities that are public reporting companies in the United States and rated investment grade.
VanEck Vectors Green Bond ETF (GRNB): GRNB seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the S&P Green Bond U.S. Dollar Select Index (the “index”). The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index. The index is comprised of bonds issued for qualified “green” purposes and seeks to measure the performance of U.S. dollar denominated “green”-labeled bonds issued globally.
VanEck Vectors Short Muni ETF (SMB): The ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bloomberg Barclays AMT-Free Short Continuous Municipal Index. The fund normally invests at least 80% of its total assets in fixed income securities that comprise the index. The index is comprised of publicly traded municipal bonds that cover the U.S. dollar denominated short-term tax-exempt bond market.
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