Displaying items by tag: fixed income

BlackRock has launched the iShares Total USD Fixed Income Market ETF, designed to capture the full taxable U.S. bond market rather than stopping at the traditional Aggregate benchmark. The new ETF tracks a broader index that meaningfully expands exposure beyond investment-grade bonds to include areas such as high yield, TIPS, floating-rate debt, and bank loans. 

Compared with core bond funds that focus mainly on investment-grade securities, this approach aims to give investors a more complete “own the market” allocation within fixed income. 

The structure may appeal to passive investors who want comprehensive diversification without making active sector bets. Ultimately, the fund positions itself as a next-step core holding for investors seeking total bond market exposure rather than a narrower definition of core fixed income.

Finsum: Broader exposure also introduces the potential for slightly higher income, though it comes with added credit and structural risk. 

The debate over how far the Federal Reserve will cut interest rates is sharpening as a backlog of key U.S. economic data finally comes into focus. Delayed employment and inflation reports, followed by fresh jobs data early in the year, are expected to clarify whether the Fed is nearing the end of its easing cycle or will need to cut more aggressively. 

Bond traders are betting on two rate cuts next year, more than the Fed currently signals, fueling optimism that Treasuries could extend a rally already shaping up as their strongest since 2020. 

The labor market sits at the center of the outlook, with upcoming jobs data seen as the most important input for determining the path of rates. Yield curves reflect this uncertainty, as shorter-term yields have fallen while longer-term rates remain elevated, widening the spread between the two. 

Finsum: If the Fed pauses amid sticky inflation, Treasury returns may rely more on coupon income than price gains, keeping the market range-bound despite elevated expectations.

U.S. equities have continued to grind higher, supported by resilient earnings and a steady economic backdrop, prompting increased speculation that markets may be shifting into a more selective, late-cycle environment. Technology names remain a key driver of sentiment, fueled by expectations that AI-related capital spending will shape corporate investment.

In fixed income, lingering inflation pressures and uncertainty around future monetary policy have kept interest-rate expectations volatile, making duration risk harder to navigate. Against this backdrop, investors are showing a growing preference for multi-asset income strategies that can blend dividends, high-yield credit, and alternative income sources to support total return through shifting cycles. 

High-yield credit’s relative resilience has only strengthened the view that diversified, multi-asset income portfolios may be better positioned to withstand volatility as markets adjust to evolving macro conditions.

Finsum: Diversifying when the landscape is uncertain is good for gains as well as risk. 

Portfolio income remains a priority for investors, especially with rate cuts and shifting macroeconomic conditions creating uncertainty. 

Closed-end funds (CEFs) offer an alternative income approach, since they issue a fixed number of shares at launch and then trade on exchanges, often providing higher yields than traditional bond strategies. 

Because CEFs behave differently from standard fixed income, they can also enhance diversification at a time when bond markets remain unpredictable. The Calamos CEF Income & Arbitrage ETF (CCEF) simplifies access to this space by actively investing in discounted closed-end funds to capture both income and potential capital appreciation. 

Finsum: CEFs could be a nice opportunity to gain exposure to alternative income streams

The Vanguard Total Bond Market Index Investor Fund (VBMFX), launched in 1986, gives investors broad exposure to the U.S. investment-grade bond market and is managed by Joshua Barrickman since 2013. 

Despite its long history, recent performance has been modest, with a 5-year annualized return of -0.62% and a 3-year return of 4.8%, both ranking in the bottom third of its category. However, the fund’s appeal lies in its low volatility, showing a 3-year standard deviation of 6.41% compared to the category average of 12.85%. 

Cost efficiency is a major strength, as VBMFX’s expense ratio of 0.15% is far below the 0.93% category average, making it one of the cheapest options in its class. 

Finsum: This fund could offer steady exposure to the bond market with minimal cost and volatility, for the right investor.