: The content advises investors to consider sticking with fixed income investments despite the Federal Reserve’s plans to cut interest rates. The co-founder and COO of BondBloxx, Joanna Gallegos, warns against rushing back into equities and suggests looking into exchange-traded funds focused on intermediate-term bonds to manage interest rate volatility effectively. Morgan Stanley Investment Management’s Tony Rochte also recommends a similar medium-term strategy with vehicles like the Eaton Vance Total Return Bond ETF, which offers a 6.6% yield.
Gallegos emphasizes the potential benefits of investing in the intermediate space, whether in credit or Treasuries, as it offers a total return tailwind when rates go down. Rochte highlights income-generating opportunities in municipal bond funds, such as the Eaton Vance Short Duration Municipal Income ETF, which offers a 3.5% yield and almost a 6% taxable equivalent yield. Additionally, Rochte mentions the conversion of a municipal bond mutual fund to an ETF, symbol EVSM, which presents attractive rates in the current environment.
Despite the Federal Reserve’s plans to cut interest rates, the benchmark 10-year U.S. Treasury note yield has reaccelerated and was hovering near 4.31% as of Thursday’s market close. This suggests that fixed income investments could still provide opportunities for investors amidst interest rate volatility. Gallegos and Rochte both recommend a medium-term strategy with a focus on intermediate-term bonds and municipal bond funds to potentially benefit from total return tailwinds and attractive yields in the current environment.
Investors are advised to carefully consider fixed income investments and potentially add to them rather than rushing back into equities. Rochte points to the Eaton Vance Total Return Bond ETF and municipal bond funds like the Eaton Vance Short Duration Municipal Income ETF as vehicles that offer attractive rates and income-generating opportunities. Gallegos suggests that investors look into exchange-traded funds focused on intermediate-term bonds to effectively manage interest rate volatility and potentially benefit from total return tailwinds when rates go down. Overall, sticking with fixed income investments may be a prudent strategy for investors despite the Federal Reserve’s intention to cut interest rates.
