Bonds have long been a staple in investor portfolios, offering the potential for steady income and relatively low volatility. However, the way that investors access bonds has changed over time. Investors are increasingly turning to bond ETFs due to their low cost, tax efficiency, and ease of use.
iShares has a range of bond ETFs to help you navigate today’s challenging landscape and meet your specific investment goals. Here’s a look at some different bond strategies.
Bonds are often thought of a ballast within a portfolio due their lower level of risk relative to equities. Investors looking for potential protection against stock market volatility while also seeking returns can consider a low cost, diversified bond fund or an allocation to low risk U.S. Treasury bonds.
Search for Yield
Finding income can be difficult in today's low yield environment. Consider investment grade or high yield bonds, which have historically generated greater income than Treasury bonds. Similarly, emerging market bonds have historically offered a higher yield than their developed market counterparts and may be a good solution for investors who are comfortable with a degree of additional risk.
Seek Protection Against Rising Rates
Seek a better balance of risk and return by focusing on credit exposure, which is tied to the health of the companies that issue bonds rather than interest rate movements. Choosing a short duration or interest rate hedged strategy can help reduce the impact of rising rates on your bond allocation.