Click here to read the original article on ETFdb.com.
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ETF Strategy for Rising Rates: Reduce Portfolio Duration
May 07, 2013 at 21:00 PM EDT
By Matt Tucker, CFA, iShares Head of Fixed Income Strategy In my last post, I highlighted sector rotation as a potential ETF strategy for a rising interest rate environment. This time, I’d like to focus on another common strategy for helping to protect a portfolio against rising rates: Reducing the duration, or interest rate risk, of a portfolio. This has been a popular strategy so far this year – flows into fixed income ETFs year-to-date have been primarily into shorter duration ETFs as investors look to cut interest rate risk in their portfolios. Through April 10th, $10.2 billion has been allocated to short duration ETFs while $2.8 billion has been redeemed from longer duration ETFs. Clearly investors are voting with their dollars [see also How To Pick The Right ETF Every Time]. This strategy can be accomplished by selling longer duration investments in favor of shorter duration ones, or by just adding [...] Click here to read the original article on ETFdb.com. Related Posts: 10 Most Successful New ETFs ETF Plays If CEOs Win Over Washington IndexIQ Launches New Market Neutral ETF Bond ETFs Turn 10 5 Most Popular New ETFs Of 2012 (So Far)
By Matt Tucker, CFA, iShares Head of Fixed Income Strategy In my last post, I highlighted sector rotation as a potential ETF strategy for a rising interest rate environment. This time, I’d like to focus on another common strategy for helping to protect a portfolio against rising rates: Reducing the duration, or interest rate risk, of a portfolio. This has been a popular strategy so far this year – flows into fixed income ETFs year-to-date have been primarily into shorter duration ETFs as investors look to cut interest rate risk in their portfolios. Through April 10th, $10.2 billion has been allocated to short duration ETFs while $2.8 billion has been redeemed from longer duration ETFs. Clearly investors are voting with their dollars [see also How To Pick The Right ETF Every Time]. This strategy can be accomplished by selling longer duration investments in favor of shorter duration ones, or by just adding [...]
