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The Zacks Analyst Blog Highlights: Aggregate Bond Negative Duration Fund, High Yield Bond Fund, iShares Core US Aggregate Bond, iShares iBoxx $ High Yield Corporate Bond and SPDR Barclays High Yield Bond ETF - Press Releases

Zacks Equity Research

For Immediate Release

 

Chicago, IL – February 18, 2015 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Aggregate Bond Negative Duration Fund (AGND-Free Report), High Yield Bond Fund (HYND-Free Report), iShares Core US Aggregate Bond (AGG-Free Report), iShares iBoxx $ High Yield Corporate Bond (HYG-Free Report) and SPDR Barclays High Yield Bond ETF (JNK-Free Report).

 

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Here are highlights from Tuesday’s Analyst Blog:    

                     

Rising Interest Rates? Great News for Bond ETFs

 

With an improved economy and better employment prospects, a rate hike by the Fed is back on the table for 2015. We have already started to see rates move higher in recent weeks in anticipation of this, as benchmark 10-year debt is now around 2%, a sharp and sudden increase from levels which were in the 1.65% range earlier in the month.


If rates continue in this direction, bond investors will likely see something that they haven’t experienced in a while, losses. With rising rates bond prices will fall, hitting the returns for investors who have big holdings in the fixed income world (see Play Rising Rates with These ETFs).


What’s a Fixed Income Investor to Do?


This puts fixed income investors in quite the quandary, as many still desire the stability that comes with bonds, but with the writing on the wall for rates, it is hard to be too optimistic about the space in the near term. However, should we see a burst in market volatility, investors will likely clamor for more bond holdings, putting many investors in a difficult spot.


Fortunately, thanks to some relatively new bond ETFs, fixed income investors might have a solution on their hands. These new products are ‘negative duration’ bonds and they actually look to rise in price when rates rise and thus are basically built for a rising rate environment (see 3 Sector ETFs to Profit from Rising Rates).


Currently, there are two such funds both coming to us from WisdomTree. First up we have the Aggregate Bond Negative Duration Fund (AGND-Free Report) which has a -5 year duration, and then the High Yield Bond Fund (HYND-Free Report) which has a -7 year duration for those who focus on the junk bond market.


More Information


These types of funds could be interesting stand-alone picks, or ones to pair with other bond holdings as well. For example, an (AGG-Free Report) investor could use AGND in order to bring down their overall duration, while a similar strategy can be used by (HYG-Free Report) or (JNK-Free Report) investors who are looking to ratchet down their interest rate risk levels with HYND.

 

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