The Zacks Analyst Blog Highlights MINT, NEAR, ICSH, SGOV and VXX
For Immediate Release
Chicago, IL – November 2, 2023 – 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. ETFs recently featured in the blog include: Enhanced Short-Maturity Strategy ETF MINT, Short Maturity Bond iShares ETF NEAR, Ultrashort Term iShares ETF ICSH and iShares 0-3 Month Treasury Bond ETF SGOV, iPath Series B S&P 500 VIX Short-Term Futures ETN VXX
Here are highlights from Wednesday’s Analyst Blog:
High-Yield Money Market ETFs Hitting 52-Week Highs
The ultra short-term corner of the bond market has been an area to watch lately, given the current stock market uncertainty. ETFs like Enhanced Short-Maturity Strategy ETF, Short Maturity Bond iShares ETF, Ultrashort Term iShares ETF and iShares 0-3 Month Treasury Bond ETF have been hitting 52-week highs lately. Let's delve a little deeper.
Rising rate worries are gripping the whole world, crippling the investing scenario again with uncertainty. Volatility may become the name of the game thanks to a host of factors ranging from sticky inflation in the United States and other parts of the developed world, fears of a slowdown in China and the resultant pressure on supply chain and global growth, and geopolitical issues.
The S&P 500 recorded its first three-month losing streak in October since March 2020. The S&P 500 fell 2.2% in October. Meanwhile, indicator of the stock market volatility – iPath Series B S&P 500 VIX Short-Term Futures ETN – has advanced 0.6% past month. As rising rate worries have been prevalent with chances of higher-for-longer U.S. interest rates, the bond investing is also at worse. This happens because, bond prices share an inverse relationship with bond yields. Investors worry about interest rate risks.
Why Cash Is King
The road ahead in the stock market is a bit unclear. As investors aim to reduce their exposure to potential stock market downturns, money-market ETFs tend to gain. Investors should note that this kind of ultra-short-term bond ETFs have lower interest rate risks.
Hence, we believe cash and short-dated fixed income may play a greater role in adding stability to a portfolio. This is especially true given that the Fed will keep rates at a 22-year high level this year and short-term bond yields will remain elevated alongside. That would result in a similar rate for cash-like assets such as money-market funds.
High Yield + Lower Interest Rate Risks = Winning Proposition
As of Oct 31, the yield on the three-year U.S. Treasury note was 4.90%, higher than the 10-year note (i.e., 4.88%). One -year note yielded 5.44% while one-month note yielded 5.56%. Notably, the fund MINT yields 4.38%, NEAR yields 3.95%, ICSH yields 4.25% and SGOV yields 4.38% annually. This means that these funds offer pretty high current income.
Meanwhile, the ETF ICSH has a low effective duration of 0.43 years while the ETF NEAR has an effective duration of 0.34 years. The ETF MINT has an effective duration of 0.01 years and SGOV has an effective duration of 0.09 years. Such short durations alleviate the interest rate risks associated with the bond investing.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX): ETF Research Reports
PIMCO Enhanced Short Maturity Active ETF (MINT): ETF Research Reports
BlackRock Short Duration Bond (NEAR): ETF Research Reports
BlackRock Ultra Short-Term Bond ETF (ICSH): ETF Research Reports
iShares 0-3 Month Treasury Bond ETF (SGOV): ETF Research Reports
