RWorries about rising rates are gripping the world, again paralyzing the investment scenario with uncertainty. Volatility could become the name of the game thanks to a multitude of factors ranging from rising inflation in the United States and other parts of the developed world, to fears of a slowdown in China and the resulting pressure. results on supply chain and global growth, and geopolitical issues.
While concerns about rising rates have prevailed with the Fed raising rates faster this year, bond and equity investments are taking a hit. The Fed decreed a 75bp rate hike at the end of last week. The rate hike was the largest since 1994. The result is slower economic growth. In total, the Fed has decreed a rate hike of 150 basis points so far this year.
The inflation projection has been raised for this year, while the Fed expects inflation to subside in 2023 and 2024. The fed funds rate is expected to be 3.4% for 2022 from 1.9 % in March, 3.8% for 2023 against 2.8% and 3.4%. % for 2024 of 2.8%. No wonder the S&P 500 and Nasdaq entered a bear market this year.
Since bond rates and prices are inversely related, bond ETFs have fallen this year. iShares 20+ Year Treasury Bond ETF TLT is down 24% in 2022, while iShares Short Term Treasury Bond ETF The SHV is only down 0.3%. Still, some interest-protected bonds have managed to fare better than regular bond ETFs. Against this backdrop, we highlight a few fixed income ETFs that have gained this year below.
Focus on ETFs
FolioBeyond Rising ETF Rates RISR – Up 31.2%
RISR invests primarily in mortgage-backed securities (MBS IO) and US Treasury bills.
WisdomTree Floating Rate Cash Fund USFR – Up 0.5%
The underlying Bloomberg US Treasury Floating Rate Bond Index is a rules-based, market value-weighted index designed to measure the performance of floating rate US Treasury bonds.
iShares Floating Rate Treasury Bond ETF (TFLO) – Up 0.4%
The underlying Bloomberg US Treasury Floating Rate Index is a market capitalization-weighted index that measures the performance of US Treasury floating rate government bonds.
ClearShares Ultra-Short Maturity ETF OPER – Up 0.2%
The ClearShares Ultra-Short Maturity ETF is an actively managed portfolio that seeks current income by investing in repurchase agreements, collateralized US government securities and other fixed income instruments.
iShares 0-3 Month Treasury Bond ETF SGOV – up 0.2%
The underlying ICE 0-3 Month US Treasury Securities Index is composed of US Treasury bonds with residual maturities of three months or less.
iShares iBonds 2022 Term High Yield & Income ETF IBHB – Up 0.1%
The underlying Bloomberg 2022 Term High Yield and Income Index includes US dollar-denominated corporate, high yield and other income-generating bonds maturing in 2022 (read: Time for cash ETFs?).
SPDR Bloomberg 1-3 Month T-Bill ETF BIL – Increase of 0.1%
The underlying Bloomberg 1-3 Month US Treasury Bill Index includes all publicly issued zero-coupon US Treasury bills that have a residual maturity of less than 3 months and greater than 1 month, are rated investment grade and have $250 million or more outstanding. face value.
Invesco VRDO Tax Free ETF PVI – Up 0.06%
The underlying ICE US Municipal AMT-Free VRDO Constrained Index tracks the performance of US dollar tax-exempt VRDOs publicly issued by US states and territories and their political subdivisions, and whose interest rates reset daily, weekly or monthly.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.