Bonds may be more than just a safe haven.
BondBloxx ETF Tony Kelly, former global head of ETFs at Goldman Sachs Asset Management, argues that the market context is a place where investors can also play an aggressive role.
“It’s definitely gotten more nuanced,” the company’s co-founder told CNBC’s “ETF Edge” this week. “There are more opportunities in fixed income because interest rates are no longer…near zero, so advisors are being a little more thoughtful.” [percent]. ”
The U.S. Federal Reserve on Wednesday cut interest rates by a quarter of a percentage point, the second such move this year. This decision lowered the benchmark interest rate to 3.75-4%, which remains well above zero.
Meanwhile, the decision sent the yield on the benchmark 10-year U.S. Treasury note back up above 4%. Yields have fallen about 2% in the past month and about 11% so far this year.
Kelly’s firm specializes in fixed income exchange-traded funds and has seen fixed income evolve into an active source of diversification, income and tactical opportunity.
Kelly highlights emerging market debt as a standout performance.
”[It’s] “It’s been one of the highest-returning asset classes in the bond market this year,” he said.
Kelly has also noticed increased interest in private credit ETFs, which allow investors to take advantage of institutional-style yields with daily liquidity.
“I don’t know if it’s necessarily something that would be called plain vanilla, but there’s a lot of interest in having that subset of the fixed income asset class in an ETF wrapper for customers,” Kelly said. “We are currently offering private credit ETF products to the market. We currently have products in registration.”
