Discover the potential benefits of investing in fixed income ETFs, such as income generation and portfolio diversification.
Delivering a range of low-cost government, investment-grade credit and ESG exposures to enhance your fixed income portfolios.
Providing a wide offering of innovative fixed income exposures, across sectors, regions and strategies.
Backed by the world's strongest and largest economies, developed market government bonds are among the safest and most liquid asset classes. Government bonds tend to perform well in turbulent times and can help diversify risk in multi-asset portfolios. Often viewed as a possible buffer for volatile equity and other riskier markets, government bonds serve as a core allocation for investors.
Investors wanting higher yields than they could get from government or investment grade corporate bonds would normally have to invest in bonds from issuers with lower credit ratings. Less financially secure issuers must pay higher coupons to compensate bond investors for the additional risk they’d be taking, i.e., the risk of the issuer being unable to pay the coupons or the principal. While this trade-off is agreeable for some investors, others are unable to accept this higher default risk.
Fortunately, more innovative solutions are now available. While they are not without risk, innovative income ETFs can offer investors the potential for higher yields without having to necessarily accept lower credit quality at the issuer level. These securities are often from investment-grade issuers, with the higher coupons driven by their subordination and other features, not the company’s credit rating.
Investor appetite for Environmental, Social and Governance (ESG) solutions across all asset classes has grown rapidly in recent years. Within fixed income, most of the focus for ESG investors is in the corporate bond space. In addition to providing exposure to companies operating in a variety of sectors, corporate bond ETFs offer choices such as targeting different maturities, currencies or credit quality.
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Investing in fixed income
Whether you’re looking for income, diversification, capital preservation or total returns, we have the strategies, the scale and the flexibility needed to match your objectives as markets evolve.
Monthly fixed income update
Read our latest thoughts on how fixed income performed in January and what we think you should be looking out for in the near term.
Global fixed income strategy monthly report
In our regularly updated macroeconomic analysis we offer an outlook for interest rates and currencies – and look at which fixed income assets are favoured across a range of market environments.
Fixed income ETFs give investors access to bonds and other fixed income securities, such as US Treasuries, corporate debt, and municipal bonds. Some potential benefits of fixed income ETFs include liquidity, portfolio transparency, and diversification.
Since bonds are generally not as volatile as other assets, like stocks, they can serve as a ballast for an overall portfolio. In particular, ETFs that invest in high quality bonds, like US Treasuries and investment grade credit, may help provide portfolio stability. When market uncertainty leads to disruption in equity markets, fixed income ETFs may provide diversification benefits. Within fixed income ETFs, strategies with lower duration may help preserve capital when interest rates rise.
As their name suggests, many investors use fixed income ETFs to generate income. Some of the bond asset classes that fixed income ETFs hold are traditionally used to seek overall portfolio stability as when market uncertainty leads to disruption in the equity markets, bonds may provide some diversification. Investors can also use specialized fixed income ETFs to help diversify their sources of income as well as help tailor their exposure to credit and duration risk.
The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested.
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This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy.
Views and opinions are based on current market conditions and are subject to change.
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