Welcome to Extreme Investor Network, where we bring you expert insights and unique opportunities in the world of investing. Today, we’re diving into the realm of income-seeking investors and the latest trends in the market.
BlackRock’s Rick Rieder recently shared his perspective on the current landscape for income-seeking investors, noting that despite the volatility in the 10-year Treasury yield, there are still plenty of opportunities to be found. The benchmark 10-year Treasury yield has been on the rise in recent weeks, reaching over 4.4% after Election Day before cooling off slightly to around 4.3%.
So where can income-seeking investors find solid income in a market marked by volatility? Rieder suggests looking at the front end and belly of the yield curve, targeting a duration of about three to four years. This approach can help manage duration risk and minimize the impact of interest rate fluctuations on investment returns.
One area that Rieder finds particularly attractive right now is high-yield bonds, which offer relatively shorter duration compared to other fixed-income assets. These bonds can provide diversification benefits in a portfolio and offer attractive yields. For example, the iShares Broad USD High Yield Corporate Bond ETF (USHY) has a duration of 3.2 years and a 30-day SEC yield of 7.22%.
Another area of interest for income investors is collateralized loan obligations (CLOs), which are floating rate loans made to businesses. Rieder sees the CLO market as one of the best opportunities for investors today, offering attractive returns in a higher-rate environment. The iShares AAA CLO Active ETF (CLOA) and the Janus Henderson AAA CLO ETF (JAAA) are two options worth considering in this space.
In addition to high-yield bonds and CLOs, Rieder also recommends exploring fixed income in Europe and securitized assets as opportunities to generate yield without sacrificing quality. By strategically combining fixed income investments with an equity portfolio, investors can build a diversified income-generating strategy that makes sense in today’s market environment.
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