|Bid||24.98 x 1000|
|Ask||25.01 x 1000|
|Day's Range||24.98 - 24.98|
|52 Week Range||15.38 - 25.25|
|PE Ratio (TTM)||N/A|
|YTD Daily Total Return||0.36%|
|Beta (5Y Monthly)||0.00|
|Expense Ratio (net)||0.18%|
If investors aren’t already allocating capital to actively managed funds, 2020 might be a good time to start. Among a list of actionable investment advice for 2020, Forbes contributor John S. Tobey suggested giving active management funds a good look for the new year.
The bond market is rife with opportunities, especially in the ETF world where fixed income funds are having another record year, but when volatility strikes, this is where active management can play a crucial role.
The bond market is rife with opportunities, especially in the ETF world where fixed income funds are having another record year, but when volatility strikes, this is where active management can play a crucial role. "The bond market is not a market to invest in a passive way," said Jeffery Elswick, director of fixed income at Frost Investment Advisors. If interest rates were to move higher in 2020, this is when Elswick sees active management as almost a necessity.
The capital markets have been filled with fears of inverted yield curves, but global governments willing to put forth stimulus packages to prop up their respective economies could ease the pressure on U.S. Treasury yields. China recently revealed rate cut programs ahead, which could be a sign that world economies are being put on notice that recession fears are real. Aside from the two biggest economies, Germany is also looking to implement similar cuts, which could put investors on notice that adjusting their portfolios may be necessary if this becomes a worldwide trend.
Inflows into passive funds hit a high in the month of June, but global investment firm J.P. Morgan is recommending to fixed income investors that being active could help de-risk a portfolio's bond exposure. This is especially true when looking at passive strategies that incorporate BBB bonds--the lowest-rated investment-grade debt, which could slip into a default bonanza if the market experiences a sharp downturn. “If you look at the composition of the corporate credit market, it is really tilted toward lower quality investment grade — what we would call a lot of BBB-rated credit," said J.P. Morgan Asset Management Head of Global Investment Grade Corporate Credit, Lisa Coleman.
The Federal Reserve has been putting its more dovish side on display, which pivots from 2018’s rate-hiking bonanza. In addition, fixed income investors are facing other challenges like inverted yield curves and signs of slowing global growth. Given these challenges, how do investors approach the bond markets?