Latest news with #iSharesFlexibleIncomeActiveETF
Yahoo
6 days ago
- Business
- Yahoo
2 trades BlackRock bond chief Rick Rieder told us he's making to help generate almost 7% yield
Rick Rieder sees bond market volatility as an opportunity amid economic policy shifts. He said short-duration Treasurys offer attractive yields as rate-cut expectations adjust. European high-yield bonds are appealing because of lower volatility and favorable currency swaps. It's been a particularly busy start to the year for BlackRock's bond chief, Rick Rieder — not that someone overseeing $3 trillion in assets has all that much spare time to begin with. The economic policy uncertainty that President Donald Trump has introduced has sent the bond market flailing in a way Rieder hasn't seen before. But the volatility isn't necessarily a bad thing. "There is change afoot. One of the great things about investing in this environment is it's not static," Rieder told Business Insider. "The reaction function to any piece of news can be really extreme," he added. "So markets go through these periods of illiquidity, and it just presents these great opportunities that, by the way, may only be there for 10 minutes, or an hour, or a day. But I've never seen markets move to such extremes." Rieder shared a few of those opportunities he's leaning into at the moment in his iShares Flexible Income Active ETF (BINC), which yields 6.6% and has grown to $9 billion in assets since launching in May 2023. One of them is the front end of the yield curve, or short-duration Treasurys. Yields on the two-year note had dropped from 4.3% last year to 3.6% in April as investors started to price in as many as five rate cuts from the Federal Reserve. But as rate-cut expectations have fallen, yields have risen back up to nearly 4%, making them more attractive. Front-end bonds also offer a hedge for economic volatility in the short term, allowing investors to clip a robust coupon without being locked in for too long. The long end of the curve, meanwhile, isn't acting as a recession hedge, Rieder said, with investors worried about inflation from tariffs and rising yields thanks to ballooning fiscal spending deficits. "I'd rather keep yield up and not have to worry about the volatility," Rieder said. "The long end is not a hedge," he added. "Its traditional offsetting risk function doesn't work today, and so until yields move significantly higher, I don't see any significant reason to own longer in interest rates." Long-end rates in Europe, however, are more attractive, Rieder said. He said he's betting on European B- and BB-rated high-yield bonds to deliver higher yields. This is because economic growth is slowing to a greater degree in Europe than in the US, and inflation is tamer, so the European Central Bank is likely to cut rates more aggressively. This has meant limited upside volatility for European rates. For example, while 10-year Treasury yields have surged from 3.99% to 4.43% since April 4, 10-year eurozone bond yields have been virtually flat, falling by just 3 basis points from 3.13% to 3.1%. When yields rise, bonds lose their value, and vice versa. "Taking some of your interest-rate risk in Europe versus the US — particularly versus long US — has been an exciting thing to be involved with," Rieder said. "Usually, US and European rates move together," he added. "Now you're seeing historic movements of European rates relative to the US, meaning European rates are much more stable." Plus, the dollar's weakness relative to the euro is icing on the cake. "Because of the cross-currency swap, you could buy Europe and you get a couple of percent of additional yield," Rieder said. To mitigate the downside risk of some of the higher-yield bonds in his portfolio, Rieder pairs them with high-quality assets like AAA collateralized loan obligations, he said. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
2 trades BlackRock bond chief Rick Rieder told us he's making to help generate almost 7% yield
Rick Rieder sees bond market volatility as an opportunity amid economic policy shifts. He said short-duration Treasurys offer attractive yields as rate-cut expectations adjust. European high-yield bonds are appealing because of lower volatility and favorable currency swaps. It's been a particularly busy start to the year for BlackRock's bond chief, Rick Rieder — not that someone overseeing $3 trillion in assets has all that much spare time to begin with. The economic policy uncertainty that President Donald Trump has introduced has sent the bond market flailing in a way Rieder hasn't seen before. But the volatility isn't necessarily a bad thing. "There is change afoot. One of the great things about investing in this environment is it's not static," Rieder told Business Insider. "The reaction function to any piece of news can be really extreme," he added. "So markets go through these periods of illiquidity, and it just presents these great opportunities that, by the way, may only be there for 10 minutes, or an hour, or a day. But I've never seen markets move to such extremes." Rieder shared a few of those opportunities he's leaning into at the moment in his iShares Flexible Income Active ETF (BINC), which yields 6.6% and has grown to $9 billion in assets since launching in May 2023. One of them is the front end of the yield curve, or short-duration Treasurys. Yields on the two-year note had dropped from 4.3% last year to 3.6% in April as investors started to price in as many as five rate cuts from the Federal Reserve. But as rate-cut expectations have fallen, yields have risen back up to nearly 4%, making them more attractive. Front-end bonds also offer a hedge for economic volatility in the short term, allowing investors to clip a robust coupon without being locked in for too long. The long end of the curve, meanwhile, isn't acting as a recession hedge, Rieder said, with investors worried about inflation from tariffs and rising yields thanks to ballooning fiscal spending deficits. "I'd rather keep yield up and not have to worry about the volatility," Rieder said. "The long end is not a hedge," he added. "Its traditional offsetting risk function doesn't work today, and so until yields move significantly higher, I don't see any significant reason to own longer in interest rates." Long-end rates in Europe, however, are more attractive, Rieder said. He said he's betting on European B- and BB-rated high-yield bonds to deliver higher yields. This is because economic growth is slowing to a greater degree in Europe than in the US, and inflation is tamer, so the European Central Bank is likely to cut rates more aggressively. This has meant limited upside volatility for European rates. For example, while 10-year Treasury yields have surged from 3.99% to 4.43% since April 4, 10-year eurozone bond yields have been virtually flat, falling by just 3 basis points from 3.13% to 3.1%. When yields rise, bonds lose their value, and vice versa. "Taking some of your interest-rate risk in Europe versus the US — particularly versus long US — has been an exciting thing to be involved with," Rieder said. "Usually, US and European rates move together," he added. "Now you're seeing historic movements of European rates relative to the US, meaning European rates are much more stable." Plus, the dollar's weakness relative to the euro is icing on the cake. "Because of the cross-currency swap, you could buy Europe and you get a couple of percent of additional yield," Rieder said. To mitigate the downside risk of some of the higher-yield bonds in his portfolio, Rieder pairs them with high-quality assets like AAA collateralized loan obligations, he said. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
6 days ago
- Business
- Business Insider
2 trades BlackRock bond chief Rick Rieder told us he's making to help generate almost 7% yield
It's been a particularly busy start to the year for BlackRock's bond chief, Rick Rieder — not that someone overseeing $3 trillion in assets has all that much spare time to begin with. The economic policy uncertainty that President Donald Trump has introduced has sent the bond market flailing in a way Rieder hasn't seen before. But the volatility isn't necessarily a bad thing. "There is change afoot. One of the great things about investing in this environment is it's not static," Rieder told Business Insider. "The reaction function to any piece of news can be really extreme," he added. "So markets go through these periods of illiquidity, and it just presents these great opportunities that, by the way, may only be there for 10 minutes, or an hour, or a day. But I've never seen markets move to such extremes." Rieder shared a few of those opportunities he's leaning into at the moment in his iShares Flexible Income Active ETF (BINC), which yields 6.6% and has grown to $9 billion in assets since launching in May 2023. One of them is the front end of the yield curve, or short-duration Treasurys. Yields on the two-year note had dropped from 4.3% last year to 3.6% in April as investors started to price in as many as five rate cuts from the Federal Reserve. But as rate-cut expectations have fallen, yields have risen back up to nearly 4%, making them more attractive. Front-end bonds also offer a hedge for economic volatility in the short term, allowing investors to clip a robust coupon without being locked in for too long. The long end of the curve, meanwhile, isn't acting as a recession hedge, Rieder said, with investors worried about inflation from tariffs and rising yields thanks to ballooning fiscal spending deficits. "I'd rather keep yield up and not have to worry about the volatility," Rieder said. "The long end is not a hedge," he added. "Its traditional offsetting risk function doesn't work today, and so until yields move significantly higher, I don't see any significant reason to own longer in interest rates." Long-end rates in Europe, however, are more attractive, Rieder said. He said he's betting on European B- and BB-rated high-yield bonds to deliver higher yields. This is because economic growth is slowing to a greater degree in Europe than in the US, and inflation is tamer, so the European Central Bank is likely to cut rates more aggressively. This has meant limited upside volatility for European rates. For example, while 10-year Treasury yields have surged from 3.99% to 4.43% since April 4, 10-year eurozone bond yields have been virtually flat, falling by just 3 basis points from 3.13% to 3.1%. When yields rise, bonds lose their value, and vice versa. "Taking some of your interest-rate risk in Europe versus the US — particularly versus long US — has been an exciting thing to be involved with," Rieder said. "Usually, US and European rates move together," he added. "Now you're seeing historic movements of European rates relative to the US, meaning European rates are much more stable." Plus, the dollar's weakness relative to the euro is icing on the cake. "Because of the cross-currency swap, you could buy Europe and you get a couple of percent of additional yield," Rieder said. To mitigate the downside risk of some of the higher-yield bonds in his portfolio, Rieder pairs them with high-quality assets like AAA collateralized loan obligations, he said.
CNBC
24-05-2025
- Business
- CNBC
Amid the volatility, these high-quality assets have attractive valuations — and solid yields
One place investors can turn to in this volatile market is agency mortgage-backed securities, according to Janus Henderson. The assets —debt obligations created out of a pool of mortgages and backed by the federal government — have historically been resilient in market selloffs, explained John Kerschner, head of U.S. securitized products and a portfolio manager at Janus. Stocks retreated on Friday after President Donald Trump resumed his threat of higher tariffs , this time leveled against Apple and the European Union . Treasury yields, which move inversely to prices, pulled back from their recent highs. Agency MBS are also relatively cheap compared to investment-grade corporate bonds, Kerschner pointed out. Spreads in corporates are still tight thanks to strong supply-demand dynamics, while agency MBS spreads are wider due to a challenging supply backdrop, he said. Premium over Treasurys "If people are concerned about the volatility in the markets, they're concerned about what's going to happen with tariffs and maybe this big tax bill that's coming, it's a place where you can get basically about 140 basis points more yield than Treasurys, with basically the same kind of credit that you're going to get in U.S. Treasurys," Kerschner said. Despite the turbulence that came with Trump's initial tariff announcements in April, agency MBS as of April 30 had their best start to a year since 2020, he pointed out. The Janus Henderson Mortgaged-Backed Securities ETF currently has a 5.11% 30-day SEC yield and 0.22% expense ratio. JMBS YTD mountain Janus Henderson Mortgaged-Backed Securities ETF in 2025 BlackRock's Rick Rieder also likes mortgage-backed debt and saw an opportunity to add the securities to the fund he manages, iShares Flexible Income Active ETF , when prices dropped during the April selloff. Cheapened by volatility "When rate volatility picks up, it can cheapen up mortgages," said Rieder, Blackrock's chief investment officer for global fixed income. "The liquidity of mortgages is great," he added. "Quality is good." BlackRock also has an ETF dedicated to investment-grade MBS, the iShares MBS ETF . The fund has a 30-day SEC yield of 4.22% and a 0.04% net expense ratio. MBB YTD mountain iShares MBS ETF in 2025 While supply may have recently weighed on the sector, Kerschner believes that should eventually even out. The Federal Reserve has been rolling agency MBS off its balance sheet, adding to supply, but banks have been pulling back from the market because they don't like the interest-rate volatility, he explained. Reduced supply coming As a result, the Street is starting to take down its projections for mortgage supply this year, he said. Plus, interest rate volatility should come down since it appears like the Federal Reserve may hold off on rate cuts for the foreseeable future, Kerschner added. "Lower volatility, less concern about banks, or maybe even positive that banks are going to come in and buy more and then less supply [is] setting up for better technicals," he said. Agency mortgages are also a big focus for Bryan Whalen, chief investment officer and generalist portfolio manager at TCW. The assets make up about 22.5% of one of the funds he manages, TCW Flexible Income ETF . The ETF has a 30-day SEC yield of 5.9% and a 0.40% total expense ratio. He sees an opportunity to get paid to wait while the assets, whose quality is the highest after Treasurys, appreciate in price. Typically, agency MBS trade at a spread over Treasurys that is less than corporate bonds. These days, they are about 65 basis points above corporates, he noted. "In an environment where yields are still bouncing around — and you're not going to expect that to tighten in — but you are getting paid a decent income while you wait for an eventual remediation in the price and or in the spread," Whalen said. That means investors should have a long-term view that interest rates will at some point come down and volatility will subside, he explained. "We'll get through the 'The Waiting Place' and we'll get to a steady-state yield curve that should also bring in, maybe, buyers that have … have certainly pulled back from the market in the last few years."
CNBC
30-04-2025
- Business
- CNBC
BlackRock says investors can profit from diversifying beyond the 60/40 amid volatility
The recent market turbulence has highlighted the importance of having a diversified portfolio, according to BlackRock. For many investors, that means looking beyond a traditional portfolio of 60% stocks and 40% fixed income, the firm said in a recent report. "Crucially, we believe investors can benefit from a more deliberate diversification strategy, where traditional asset classes may not meet the moment," the team wrote. Equities fell on Wednesday after data showed the United States economy contracted in the first quarter, raising concerns about a possible recession. Treasury yields were flat. Yields move inversely to prices. The moves were just the latest in the market's ups and downs as investors consider President Donald Trump's trade policy and ensuing tariff negotiations. Expanding beyond a basic 60/40 makes sense because stocks and bonds haven't had the negative correlation they once enjoyed — where bonds would provide a ballast if stocks tanked, said Gargi Chaudhuri, chief investment and portfolio strategist at BlackRock. Not only that, there has been an increasingly positive correlation, she said. For instance, earlier this month stocks sank and bond yields rose, particularly on the longer end of the curve, Chaudhuri pointed out. That's led to a lot of clients asking, "what else?" she said. "[When] rethinking your 60/40, I think the starting place is important," Chaudhuri said. "What type of portfolio you're trying to build of that 60 — what part is in U.S. versus international," she added. "Of the 40, what part is in something traditional like an [ iShares Core US Aggregate Bond ETF ] AGG versus more shorter-duration, income-seeking solutions." Diversifying your portfolio There are several ways to diversify your portfolio to help hedge against volatility, Chaudhuri said. First, when looking at the fixed income portion, investors should concentrate on maturities in the 3- to 7-year range, she said. That allows them to focus on "the income of fixed income," she added. For instance, the iShares Flexible Income Active ETF has an effective duration of around 3 years. BINC YTD mountain iShares Flexible Income Active ETF In addition, a small exposure to inflation-linked bonds in the front end of the curve could also help protect against inflation, Chaudhuri said. Within equities, investors should make sure they also have international allocations in addition to U.S. stocks, she said. The percentage depends on the investor, she noted, but said most advisors are underweight international. Then, investors can consider adding sleeves of diversifiers in their portfolios, like gold, which has had a tremendous run of late. "Maybe it won't continue to go up at a straight line like it has, but certainly considering the diversifying properties, especially in a slowing growth, a rising inflationary world where you might want to reconsider the role of gold in a portfolio," she said. Then there are what Chaudhuri calls liquid alternatives that are market-neutral strategies that have a lower correlation to the S & P 500 . "When equity markets are going down, they will not follow that same path. So looking at strong alpha generators that have a very low beta to the equity as well as the bond markets," she said. These solutions can "significantly improve your portfolio outcomes by enhancing your performance … especially in a market down, but certainly in a market up scenario as well by utilizing different futures — basically long, short strategies across several sectors of the market, several parts of the capital stack in fixed income," she added. BlackRock has three of these strategies that it said delivered better annualized returns and lower annualized risk compared to the benchmark aggregate bond index in the past three years. The BlackRock Global Equity Market Neutral Fund (BDMAX) focuses on diversification through equity long and shorts in an effort to deliver attractive returns that have a lower correlation to broad asset classes. The BlackRock Tactical Opportunities Fund (PCBAX) also seeks a lower correlation between stocks and bonds with a mix of equities, sovereign bonds and currencies. Lastly, the BlackRock Systematic Multi-Strategy Fund (BAMBX) focuses on total return that includes income and capital appreciation. BAMBX YTD mountain BlackRock Systematic Multi-Strategy Fund The funds don't come cheap. The more accessible A-shares for the BlackRock Global Equity Market Neutral Fund have a 1.6% net expense ratio, while the BlackRock Tactical Opportunities Fund has a 1.09% and BlackRock Systematic Multi-Strategy Fund as a 1.2% net expense ratio. Still, diversifying beyond the 60/40 may not be for everyone, Chaudhuri said. "You could be an investor that's just starting your investing journey … and you want a simple liquid, one ticker solution," she said. In that case, something like the iShares Core 60/40 Balanced Allocation ETF (AOR) could work, she said. "They don't want to be thinking about rebalancing," she said. "It has your 60 and 40, and it's balanced." AOR .SPX YTD line iShares Core 60/40 Balanced Allocation ETF vs. S & P 500
