Are you an investor looking to make the most of your cash reserves? BlackRock has recently released a report suggesting that now might be the time to start shifting some of that money into bonds. With the bond market experiencing volatility due to uncertainty surrounding interest rates and the Federal Reserve’s monetary policies, it could be a strategic move to adjust your investment portfolio.
According to Steve Laipply, global co-head of iShares fixed income ETFs at BlackRock, yields on 10-year Treasury bonds are currently at historic lows not seen in 20 years. This presents an opportunity for investors to lock in higher yields by moving into fixed income securities.
It’s important to note that trying to time the market can be risky, especially since the Federal Reserve doesn’t typically give clear signals well in advance. Instead, consider using a dollar-cost averaging strategy to gradually add exposure to fixed income over time.
Many investors are currently underweight in fixed income, with an average allocation of just 19%. To capitalize on this opportunity, consider using a mix of individual bonds and bond funds in your portfolio. BlackRock recommends an approach that includes both passive and actively managed funds, with an emphasis on intermediate duration bonds.
For those seeking broad exposure to U.S. investment-grade bonds, BlackRock offers the iShares Core U.S. Aggregate Bond ETF (AGG), which tracks the Bloomberg U.S. Aggregate Index. This passively managed fund has a competitive 30-day SEC yield of 4.81% and a low expense ratio of 0.03%.
If you’re interested in potentially higher-yielding names, the iShares Core Total USD Bond Market ETF (IUSB) is another passively managed option to consider. For investors looking for an actively managed fund, BlackRock’s Flexible Income ETF (BINC) offers a 30-day SEC yield of 6% and a net expense ratio of 0.4%.
By taking advantage of the current market conditions and strategically reallocating your investments into fixed income, you can position yourself for potential growth and stability in your investment portfolio. Stay informed and make informed decisions to maximize your returns in the ever-evolving financial landscape.