Given the Federal Reserve’s tighter monetary policy outlook and interest rate normalization heading into the late economic cycle, many have also anticipated an end to the three-decade long bull run in the fixed-income market. After years of strength, the benchmark Bloomberg Barclays U.S. Aggregate Bond Index now trades with a longer duration, greater exposure to U.S. government debt and lower yield that would not safely account for the risks involved.
Alternatively, fixed-income investors may be looking into actively managed bond ETFs with an active management team that is more capable of adapting to the changing interest rates. For example, investors can supplement their portfolios with less rate sensitive strategies like the PIMCO Low Duration Active ETF (NYSEArca: LDUR). LDUR’s the management style could serve fixed income investors well as the Federal Reserve continues boosting interest rates.
Actively managed strategies are also beginning to shine and offer investors with ways to potentially enhance returns in more uncertain times. Investors may look to a time-tested active approach to potentially enhance returns. For example, the actively managed Davis Select U.S. Equity ETF (NasdaqGM: DUSA), Davis Select Financial ETF (NasdaqGM: DFNL), Davis Select International ETF (NasdaqGM: DINT) and Davis Select Worldwide ETF (NasdaqGM: DWLD) are backed by Davis Advisors’ focuses on long-term opportunities and incorporate the money manager’s judgement experience, high conviction, low turnover, accountability and alignment. The Davis team screens for fundamental characteristics, including cash flows assets and liabilities, and other criteria.
The actively managed Cambria Tail Risk ETF (BATS: TAIL) can provide income and capital appreciation from investments in the U.S. markets while protecting against downside risk. The active ETF will invest in cash and U.S. government bonds, and utilizing a put option strategy to manage the risk of a significant negative movement in the value of domestic equities, or more commonly known as tail risk, over rolling one-month periods.
Additionally, something like the ARK Invest’s flagship ARK Innovation Fund (NYSEArca: ARKK) could allow investors to tap into the growth of disruptive technologies. ARKK seeks to invest in the cornerstone companies taken from healthcare, technology and industrial sectors that focus on investing in disruptive innovation. Such companies may include ones that benefit from big data, cloud computing, cryptocurrencies, the sharing economy, genomic sequencing, molecular medicine, agricultural biology, 3D printing, energy storage, and autonomous vehicles.
For more trending stories, visit our trending category.