Related: How ETF Investors Can Capitalize on Rapid Growth in ETFs
Supporting the renewed interest in bond ETFs, investors are looking at alternative fixed-income strategies that may hold up during periods of higher interest rates. For example, floating-rate bond ETFs have been a popular choice, revealing concern that the Fed’s plans to tighten its monetary policy could weigh on the debt markets.
“It’s highly encouraging,” Todd Rosenbluth, director of ETF and mutual fund research at CFRA, told FT. “Even as interest rates have edged higher, investors are embracing lower-cost alternatives.”
Others have shifted away from government debt and looked in to higher-yielding corporate credit and emerging market debt as alternatives. Bond ETFs with a shorter duration have also been a popular way to limit the negative effectis of rising rates.
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