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Forbes
27-05-2025
- Business
- Forbes
6 Of The Best Fixed Income Funds To Diversify Your Investments
Fixed-income investments are in the spotlight, thanks to strong yields and prevailing stock market uncertainty. A solid income stream paired with relative price stability is an appealing combo, and investors are taking advantage. If you'd like to increase your allocation to fixed income, here are six solid funds to consider. Fixed-income assets provide important diversification for well-rounded portfolios. The best fixed-income investments can deliver predictable income without wild price swings. Alongside growth-oriented equity holdings, fixed-income securities have a stabilizing effect. Learn more about diversifying investments. Funds provide easy access to that fixed-income exposure. They also deepen a portfolio's diversification because they hold multiple securities—often with varying maturities and issuers. The best fixed-income investments below were identified by screening mutual funds and ETFs for these criteria: Although the universe of funds screened included mutual funds, the top funds meeting these criteria were all ETFs. The table below introduces six fixed-income ETFs with intermediate-term maturities, reasonable expense ratios and strong track records relative to peers. They are listed from lowest to highest expense ratio. The SPDR Portfolio Intermediate Term Corporate Bond ETF tracks the Bloomberg Intermediate US Corporate Index. The holdings are fixed-rate debts, each with an outstanding par value of $300 million or more, issued by industrial, utility and financial businesses. SPIB holds nearly 5,000 debt securities, with the top holding comprising just 0.23% of the portfolio. Issuers include Goldman Sachs, Bank of America, Duke Energy and Amazon. All holdings are investment-grade quality, with an emphasis on A1 through A3 credit ratings. A1 through A3 are the fifth, sixth and seventh highest ratings on Moody's scale. They are considered upper-medium grade, which implies low credit risk but warrants a premium vs. the highest-rated AAA issues. This supports the fund's competitive yield of 4.95%. SPIB has the longest average maturity of the funds on this list, at 4.88 years. SPIB provides monthly distributions. Since early 2024, the payouts have ranged from $0.10 to $0.12 per share. VanEck IG Floating Rate ETF tracks the MVIS US Investment Grade Floating Rate Index. The index includes investment-grade, corporate-issued, floating-rate notes. FLTR provides exposure to floating-rate debt, which is appealing if you expect interest rates to rise. Because the rates reset periodically, the holdings should not lose value when interest rates increase—nor will they appreciate if rates fall. The securities in the FLTR portfolio are denominated in U.S. dollars, but the issuers are all over the world. The international exposure to the United Kingdom, Australia, Canada, Japan and others can extend your portfolio's diversification. On the other hand, FLTR has a heavy concentration in financials, which could be a disadvantage depending on how else you're invested. FLTR pays distributions monthly. Over the past 18 months, the payouts have ranged from $0.09 to nearly $0.14. iShares 3-7 Year Treasury Bond ETF invests in intermediate-term debts issued by the U.S. government. This portfolio is more conservative than funds holding corporate debt. Moody's recently downgraded the U.S. government's credit rating from the highest AAA rating to AA1, citing the growing debt balance and high interest payment ratios. Standard & Poor's and Fitch, the other two credit agencies, downgraded the U.S. government from AAA in 2011 and 2023, respectively. Even so, IEI provides a good yield and slightly higher credit quality than many corporate debt portfolios. The effective duration of nearly five years ensures some stability in interest income, though this portfolio would be subject to price changes driven by interest rates. IEI pays distributions monthly, in amounts that have recently ranged from $0.28 to $0.34 per share. Janus Henderson AAA CLO ETF invests in investment-grade collateralized loan obligations (CLO). CLOs are securitized bank loan portfolios, which include floating-rate loans made to companies with credit ratings below investment grade. The loans have collateral, which provides some security, and the portfolio is divided into groups, called tranches, of varying risk levels. The AAA tranche is the safest. AAA investors receive payments first and absorb losses last. JAAA provides exposure to higher-yield, floating-rate CLOs. This fund is a diversification play. CLOs do not have the downside risk of traditional fixed-income securities because their rates adjust to market conditions. But due to the complexity of these assets and the lower quality of the underlying loans, their yield can be high. The presence of collateral and the priority of the AAA tranche mitigates some of the risks. JAAA launched in 2020 and has since produced a three-year average annual NAV return of 5.9%. The fund makes monthly distributions that have recently ranged from $0.20 to $0.27, producing a 30-day yield of 5.48%. Eaton Vance Short Duration Income ETF invests in U.S. Treasury securities, corporate bonds, mortgage-backed securities and asset-backed securities with an average duration of three years or less. EVSD is an actively managed and diversified portfolio of fixed-income securities with short to intermediate maturities. The portfolio prioritizes securities in the lower end of the investment-grade range—ratings of A1 through A3 and Baa1 through Baa3 on Moody's scale. About 30% of the EVSD portfolio is asset-backed, mortgage-backed and commercial mortgage-backed securities. There is also a small position in higher-yield, speculative bonds. The inclusion of varying debt types and credit qualities helps the fund reach its stated goal of above-average returns over three to five years. EVSD pays monthly distributions that have fluctuated from $0.18 to $0.24 per share over the past 18 months. iShares CMBS ETF invests in U.S.-issued, investment-grade, commercial mortgage-backed bonds. The underlying mortgages typically finance office buildings, shopping centers, factories, hotels and apartment buildings. As with CLOs, the mortgages are grouped by their risk level to create multiple tranches with different risk levels and yields. Commercial mortgage-backed securities pay higher yields than Treasury or corporate bonds and have different risk profiles. They are tied to commercial real estate, since it is the underlying collateral for the loans. This ETF's portfolio is primarily AAA- and AA-rated securities, at the lower end of the risk spectrum. It provides a nice entry point for investors who want to raise their overall fixed-income yield by diversifying into commercial mortgage-backed securities. CMBS pays monthly distributions that have varied from $0.11 to $0.14 over the past 18 months. Bottom Line Fixed-income funds can deliver income, stability and diversification with varying degrees of risk. They can also provide exposure to more complex market segments that were once only available to institutional investors, such as CLOs and commercial mortgage-backed bonds. If you are new to fixed-income investing, opt for simpler funds that prioritize credit quality. You can always expand your exposure for higher yields later, as you gain investing confidence. Fixed-income funds are a great choice for novice investors. These funds can provide income and stability, which can provide a stabilizing effect on portfolios with heavy stock exposure. There are thousands of fixed-income mutual funds. Some specialize in a market segment, like tax-free municipal bonds or corporate bonds, while others have a diversified strategy. Fixed-income funds commonly pay monthly distributions.
Yahoo
22-05-2025
- Business
- Yahoo
Should SPDR Portfolio S&P 400 Mid Cap ETF (SPMD) Be on Your Investing Radar?
Looking for broad exposure to the Mid Cap Blend segment of the US equity market? You should consider the SPDR Portfolio S&P 400 Mid Cap ETF (SPMD), a passively managed exchange traded fund launched on 11/08/2005. The fund is sponsored by State Street Global Advisors. It has amassed assets over $12.51 billion, making it one of the larger ETFs attempting to match the Mid Cap Blend segment of the US equity market. With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus they have a nice balance of growth potential and stability. Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments. When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal. Annual operating expenses for this ETF are 0.03%, making it the least expensive products in the space. It has a 12-month trailing dividend yield of 1.51%. Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis. This ETF has heaviest allocation to the Industrials sector--about 22.30% of the portfolio. Financials and Consumer Discretionary round out the top three. Looking at individual holdings, Emcor Group Inc (EME) accounts for about 0.73% of total assets, followed by Interactive Brokers Gro Cl A (IBKR) and Okta Inc (OKTA). The top 10 holdings account for about 6.65% of total assets under management. SPMD seeks to match the performance of the S&P 1000 Index before fees and expenses. The S&P MidCap 400 Index combines the S&P MidCap 400 and the S&P SmallCap 600 to form an investable benchmark for the mid to small cap segment of the U.S. equity market. The ETF has lost about -3.82% so far this year and is up roughly 0.53% in the last one year (as of 05/22/2025). In the past 52-week period, it has traded between $44.89 and $59.56. The ETF has a beta of 1.06 and standard deviation of 20.36% for the trailing three-year period. With about 405 holdings, it effectively diversifies company-specific risk. SPDR Portfolio S&P 400 Mid Cap ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPMD is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well. The Vanguard Mid-Cap ETF (VO) and the iShares Core S&P Mid-Cap ETF (IJH) track a similar index. While Vanguard Mid-Cap ETF has $78.66 billion in assets, iShares Core S&P Mid-Cap ETF has $91.67 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%. Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors. To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR Portfolio S&P 400 Mid Cap ETF (SPMD): ETF Research Reports Interactive Brokers Group, Inc. (IBKR) : Free Stock Analysis Report EMCOR Group, Inc. (EME) : Free Stock Analysis Report iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports Vanguard Mid-Cap ETF (VO): ETF Research Reports Okta, Inc. (OKTA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
13-04-2025
- Business
- Yahoo
SPDR Portfolio S&P 1500 Composite Stock Market ETF: What Do You Get When You Buy "Everything"?
Warren Buffett's best advice for the average investor is to just buy "the market." He has singled out the S&P 500 index as a good choice for this approach, and an S&P 500 ETF wouldn't be a bad choice, but it also isn't "the market." A more comprehensive option would be the SPDR Portfolio S&P 1500 Composite Stock Market ETF (NYSEMKT: SPTM). Here's why. The S&P 500 index is fairly well structured. As its name implies, it owns around 500 stocks (although corporate events can change the number over the short term). Those stocks are selected by a committee so that they are broadly representative of the U.S. economy. The largest and most important companies in an industry tend to be the ones that get added to the S&P 500 index. The index constituents are weighted by market capitalization, so the largest companies in the index have the most impact on its performance. There are negative aspects about the structure of the S&P 500 index, too. For example, market cap weighting often leads to the index being heavily influenced by hot sectors. When sentiment turns negative that can lead to swift drawdowns. That's been on display recently with the market sell-off. However, the index weightings rebalance over time and new sectors rise to the top. All in, the S&P 500 index is a solid suggestion, which is why Warren Buffett guides investors toward this option. That said, the S&P 500 index leaves out a lot of stocks because of its focus on large companies. Specifically, mid-cap and small-cap stocks aren't represented and there are a lot more of those companies than large caps. There are a couple of reasons you might want to add mid-cap and small-cap stocks to the mix. For starters, more stocks means more diversification. You'll also get exposure to companies that have potentially larger growth opportunities given their relatively small sizes. If you like the concept of the S&P 500 index, but want to have broader exposure to "the market," you should look at the SPDR Portfolio S&P 1500 Composite Stock Market ETF. This ETF is actually three indexes in one. The portfolio includes all of the S&P 500 index stocks along with the stocks included in the S&P Midcap 400 index and the S&P Small Cap 600 index. That truly covers the broadest possible spectrum of the market, with a very modest expense ratio of just 0.03%. What's most notable, however, is that the S&P Midcap 400 index and the S&P Small Cap 600 index are constructed in a similar manner to the S&P 500 index. Specifically, a committee oversees the companies that get added to the respective lists. If you like the idea of a little human intervention to weed out obviously troubled businesses, the SPDR Portfolio S&P 1500 Composite Stock Market ETF has you covered. And since the index is market cap weighted, the stocks in the S&P 500 will still have the biggest impact on overall performance. All in, you increase diversification without losing much on the performance side of the equation. Owning the SPDR Portfolio S&P 1500 Composite Stock Market ETF has been a far better option than simply buying small-cap or mid-cap indexes. Yes, you could do better with just the S&P 500 index, but you give up very little performance with the larger S&P 1500 Composite and materially increase diversification. All in, if you want to own "the market" as Warren Buffett has suggested, the SPDR Portfolio S&P 1500 Composite Stock Market ETF is one of the broadest options you have at your disposal. Notably, it comes with a healthy dose of human oversight for those who aren't comfortable leaving investing decisions to computers or blind fate. Before you buy stock in SPDR Series Trust - SPDR Portfolio S&P 1500 Composite Stock Market ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and SPDR Series Trust - SPDR Portfolio S&P 1500 Composite Stock Market ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $679,900!* Now, it's worth noting Stock Advisor's total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 5, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. SPDR Portfolio S&P 1500 Composite Stock Market ETF: What Do You Get When You Buy "Everything"? was originally published by The Motley Fool
