iShares 0-5 Year TIPS Bond ETF (ARCA: STIP)

Últimas noticias sobre iShares 0-5 Year TIPS Bond ETF (ARCA:STIP)

iShares 0-5 Year TIPS Bond ETF

The fund seeks to track the investment results of the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Years Index (Series-L) (the Underlying Index), which measures the performance of the inflation-protected public obligations of the U.S. Treasury, commonly known as TIPS, that have a remaining maturity of less than five years. TIPS are securities issued by the U.S. Treasury that are designed to provide inflation protection to investors. TIPS are income-generating instruments whose interest and principal payments are adjusted for inflation a sustained increase in prices that erodes the purchasing power of money. The inflation adjustment, which is typically applied monthly to the principal of the bond, follows a designated inflation index, the non-seasonally adjusted Consumer Price Index for All Urban Consumers (CPI), and TIPS principal payments are adjusted according to changes in the CPI.

Blackrock Cash Funds: Treasury, Sl Agency Shares

A large percentage of Americans appear to be wrong about the state <a href="https://www.benzinga.com/topic/us-economy">of the economy.</a>
While most people share a gloomy sentiment about unemployment, poverty, purchasing power and consumer spending, hard data shows that the U.S. economy is actually thriving.
A recent <a href="https://www.ft.com/content/9c7931aa-4973-475e-9841-d7ebd54b0f47">survey</a> by FocalData and Financial Times sheds a worrying and bewildering light on perceptions of economic well-being versus real data markers.
More than 2200 U.S. adults were asked to rate their opinion on several economic indicators, and their answers were incorrect in most cases when compared to the numbers.
<h3 class="wp-block-heading">Are Wages Losing To Inflation?</h3>
Inflation has been a major concern for Americans — and most of the industrialized world — since the impact of the <a href="https://www.benzinga.com/news/23/11/36036187/anthony-fauci-to-mark-first-appearance-before-gop-controlled-house-urged-to-confront-the-facts">COVID-19 pandemic</a> and the <a href="https://www.benzinga.com/etfs/sector-etfs/23/12/36121317/janet-yellen-says-us-will-be-responsible-if-ukraine-loses-as-100b-aid-stuck-in-congress">Russian invasion of Ukraine</a> shot prices through the roof.
Although, with prices <a href="https://www.benzinga.com/economics/macro-economic-events/23/11/35775608/us-inflation-eases-more-than-expected-in-october-cements-expectations-for-end-of-">decelerating to a 3.2% rise in October versus the previous year</a>, the worst part of the inflation storm seems to have passed.
<a href="https://www.benzinga.com/news/23/11/35872246/fomc-minutes-could-provide-markets-with-a-sobering-reminder-of-higher-for-longer">Inflation has been consistently dropping since peaking in June 2022</a>, and recent decisions on interest rates by the FOMC indicate that the Fed is getting comfortable with the rate of disinflation. The agency chose to pause interest rate hikes twice in a row in the most recent meetings.
This week, a report by ING even predicted that the Fed <a href="https://www.benzinga.com/news/23/12/36058438/federal-reserve-to-implement-six-rate-cuts-in-2024-amid-economic-slowdown-says-ing">is ready to implement a series of rate cuts in 2024</a>.
Yet of those surveyed, 73% of respondents believed that the rate of inflation had actually risen in the past year, while only 9% acknowledged that the rate of inflation was actually dropping.
While inflation is being tempered, the people surveyed continue to rate it among the most concerning issues impacting Americans today. When asked to compare prices and wages between today and one year ago, 90% of respondents incorrectly answered that prices have risen faster than wages.
Data from the U.S. Bureau of Labor Statistics, compiled by the St. Louis Fed, shows that median salaries have been rising consistently since mid-2022 while inflation has dropped.
<h3 class="wp-block-heading">Are Americans Worse Off Today Than Before COVID?</h3>
The survey also revealed skewed perceptions regarding net worth, living standards, and purchasing power.
Sixty-seven percent of those surveyed indicated they believe the median American household was wealthier before the pandemic, while 63% thought that the median income could afford a better lifestyle a year ago.
Yet Fed data from the Survey of Consumer Finances shows that American households have become consistently wealthier in the period spanning from 2019 to 2022, with the median net worth jumping from $144,000 to $192,000.
<a href="https://www.benzinga.com/federal-reserve/23/10/35448776/what-is-the-average-net-worth-by-age">Net worth is up across the entire income ladder</a>, as well as wages, that have risen for lower-income families since before the pandemic.
<h3 class="wp-block-heading">So, What's Going On?</h3>
Perceptions of economic well-being are relative and don't necessarily follow hard data markers.&nbsp;
Google Trends data reveals that the frequency of searches for &#8220;inflation&#8221; remained consistent in November, the same month the survey was conducted, as it was in January, a period when annual price increases were recorded at 6.4%.
Although the inflation rate halved, public interest in the topic remained high. This sustained attention is partly fueled by media reports that rely on search trends to determine their focus. This creates a feedback loop where certain topics are amplified and stay in the public consciousness, even when actual data suggests they are no longer a significant threat to the economy.
Political factors may also play a role in this phenomenon. As the presidential election approaches, candidates, particularly from the Republican side, are likely to craft narratives that resonate with their voter base, which can include emphasizing certain economic issues.
In recent debates, including the <a href="http://benzinga.com/news/23/12/36126019/trump-absent-tensions-high-highlights-from-the-last-gop-debate-of-2023-featuring-desantis-haley-chri">fourth Republican candidate debate</a> this week, there has been a trend among Republican candidates to critique the current state of the economy.
In the second Republican debate from September, former candidate Mike Pence said that "Bidenomics has failed. Wages are not keeping up with inflation," which has been contrasted by actual data. The former vice president has since dropped out of the race.
Candidate Vivek Ramaswamy said in the third debate from November, that "prices are going up, but wages have remained flat," while South Carolina Senator and presidential candidate Tim Scott said that gas prices are "40% higher right now than they were just a little over two years ago."&nbsp;
According to data from the Energy Information Administration, retail gas prices nationwide have decreased since June 2022 and, as of November, are comparable to the rates seen two years earlier.
Yet, according to analyst John Burn-Murdoch, who authored the survey, poll respondents sometimes answer surveys with wrong information in an effort to adhere to the narrative of their party, rather than to reflect their own opinions, in a phenomenon referred to as "expressive responding."
Lastly, people's perceptions of the economy can take time to adapt. While it's true that the last year has been favorable in raw economic terms, the effects of decades-high inflation and interest rates on people's lives can leave emotional scars that don't disappear as quickly as data points turn around.
For investors looking for ways to capitalized on the shifting inflation outlook, here are five ETFs to consider:
<ul>
<li>iShares TIPS Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TIP#NYSE">TIP</a>): This ETF tracks the performance of U.S. Treasury Inflation-Protected Securities (TIPS), providing exposure to inflation-adjusted bonds.</li>
<li>SPDR Gold Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>): While not directly linked to inflation, gold is often considered a hedge against inflation, and this ETF tracks the price of gold bullion.</li>
<li>Shares U.S. Treasury Bond ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/GOVT#BATS">GOVT</a>): This ETF invests in U.S. Treasury bonds of various maturities, which can be influenced by inflation expectations.</li>
<li>ProShares UltraShort 20+ Year Treasury (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TBT#NYSE">TBT</a>): This ETF seeks to provide twice the inverse daily performance of long-term U.S. Treasury bonds, making it potentially attractive during periods of rising inflation.</li>
<li>iShares U.S. Treasury Inflation-Protected Securities ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/STIP#NYSE">STIP</a>): Similar to TIP, this ETF offers exposure to TIPS, which are designed to protect against inflation.</li>
</ul>
Photo: Shutterstock

News

Politics

Federal Reserve

Personal Finance

General

GOVT

STIP

ProShares UltraShort Lehman 20+ Year Treasury

Chances Are You're Wrong On Bidenomics: Survey Finds Wildly Concerning Views About Wealth, Income And Jobs

Former &quot;Bond King&quot;&nbsp;Bill Gross, who popularized the &ldquo;Total Return&rdquo; strategy in the 1980s, has criticized current proponents of that approach, saying almost all such funds have become quasi &ldquo;index funds&rdquo; in the last five years.&nbsp;&nbsp;
Gross, the co-founder of&nbsp;PIMCO, said some of these &quot;Total Return&quot; funds are actively managed with the ability to go low in terms of maturity duration, but they all seem to be chasing &ldquo;index-plus&rdquo; performance as opposed to &ldquo;total return&rdquo; management.&nbsp;
&ldquo;Perhaps they should all change their names to &#39;index plus&#39; to reflect that reality,&rdquo; he said in an article on&nbsp;<a href="https://williamhgross.com/50-basis-deposit-no-return/" target="_blank">his&nbsp;</a>website.
Also Read:&nbsp;<a href="https://www.benzinga.com/money/best-broker-for-short-selling" target="_blank">Brokers For Short Selling</a>
Gross said that when he had started a total return fund, his idea was to combine interest income with capital gains in bond prices to produce a &ldquo;total return&rdquo; over and above current yields.
Gross said it worked famously until the beginning of this year. &ldquo;Admittedly, a secular bond bull market was a huge tailwind, but PIMCO&rsquo;s &#39;Total Return Fund&#39; used other non-index strategies to differentiate itself from the pack. &quot;The years 2007-2009 were particularly reflective, voiding subprime mortgages much like&nbsp;Michael Burry&rsquo;s&nbsp;&#39;Big Short&#39; in the hedge fund space,&rdquo; he said.
This led to PIMCO&#39;s total assets doubling to $2 trillion in the ensuing few years, Gross added.
Lost Vision:&nbsp;He pointed out that between 2014 and now, some of the leading proponents of this strategy have lost their total return &ldquo;charter,&quot; or vision, adding that their year-to-date returns are down between 16% and 18%.
Gross also observed that individual investors have been misled. &ldquo;Would they have preferred to pay 50 basis points for the privilege of outperforming a bond market index and losing 15% of their money?&rdquo; he questioned.
Suggestion: Gross said such bond funds should change their names or perform their original mission of returning current bond market yields in addition to alpha from non-durational sources.
The expert also highlighted an ETF in which he invests. &ldquo;I have been investing in an ETF that charges only 0.03% in fees and is accurately labeled as&nbsp;iShares 0-5 Year TIPS Bond ETF&nbsp;(NYSE:&nbsp;<a href="https://www.benzinga.com/stock/stip#NYSE" target="_blank">STIP</a>) with the NYSE stock symbol of &#39;STIP.&#39; Truth in advertising,&rdquo; he said.
Some of the total return ETFs have given negative returns since the beginning of 2022. For example, the&nbsp;PGIM Total Return Bond ETF&nbsp;(NYSE:&nbsp;<a href="https://www.benzinga.com/stock/ptrb#NYSE" target="_blank">PTRB</a>) is down over 18% since the beginning of the year, while the&nbsp;T Rowe Price Total Return ETF&nbsp;(NYSE:&nbsp;<a href="https://www.benzinga.com/stock/totr#NYSE" target="_blank">TOTR</a>) is down over 19% in the same period.
Read Next:&nbsp;<a href="https://www.benzinga.com/government/22/10/29317201/biden-could-help-lower-your-energy-bills-as-white-house-says-companies-high-prices-amid-falling-inpu" target="_blank">Biden Could Help Lower Your Energy Bills As White House Says Companies&#39; High Prices Amid Falling Input Costs &#39;Unacceptable&#39;</a>
&nbsp;

Specialty ETFs

ETFs

PGIM ETF Trust PGIM Total Return Bond ETF

PTRB

TOTR

Bill Gross Has A Problem With Today's 'Total Return' Bond Funds: 'They Should All Change Their Names'

It&#39;s the holiday shopping season and in the spirit of the season, everyone loves a good deal. Well, everyone loves a good deal all year long and that&#39;s something exchange-traded funds issuers often oblige.
BlackRock&#39;s iShares unit, the world&#39;s largest ETF sponsor, is adding some cheer to the season, announcing fee cuts on four of its well-known products.
For the most part, <a href="https://www.benzinga.com/trading-ideas/long-ideas/20/12/18828594/spac-fever-finds-another-etf-home-in-new-tuttle-fund">the expense ratio reductions</a> are modest, but for long-term investors, those small cuts can add up to big savings over time.
Here are the four iShares ETFs with newly lower fees.
iShares Core MSCI Emerging Markets ETF (IEMG)
The iShares Core MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iemg#NYSE">IEMG</a>) now has an annual fee of 0.11%, or $11 on a $10,000 investment.&nbsp;That draws IEMG to within one basis point of primary rival, the Vanguard FTSE Emerging Markets ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vwo#NYSE">VWO</a>). VWO and IEMG are the two largest emerging markets ETFs, a competition that&#39;s really limited to these two products.
iShares 0-5 Year TIPS Bond ETF (STIP)
There&#39;s plenty of debate regarding just how pesky inflation currently is and will be next year, but there&#39;s no denying it just got a little bit cheaper to protect against the scourge of rising prices as the iShares 0-5 Year TIPS Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/stip#NYSE">STIP</a>) now charges 0.05%, down from 0.06%. The $2.91 billion STIP, which turned 10 years old earlier this month, tracks the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Years Index.
iShares Core International Aggregate Bond ETF (IAGG)
The iShares Core International Aggregate Bond ETF (CBOE: IAGG) had its fee trimmed to 0.08% from 0.09%. Alone, that&#39;s barely noteworthy, but in this case, it&#39;s interesting because IAGG now has the same annual fee as its most director competitor, the Vanguard Total International Bond Index Fund ETF Shares (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bndx#NASDAQ">BNDX</a>).
iShares International Dividend Growth ETF (IGRO)
Alright, now we&#39;re getting somewhere in terms of notable fee reductions. The iShares International Dividend Growth ETF (CBOE: IGRO) is now charging 0.15% per year, down from 0.22%. That&#39;s significant by the standards of individual ETF expense ratio reductions.
IGRO&#39;s newly cheaper status is relevant for investors heading into 2021 because international stocks are suddenly a favored asset class for the new year and expectations for dividend growth are fairly stout, indicating this ETF could be a fine idea for income investors in the new year.

Bonds

Broad U.S. Equity ETFs

Emerging Markets

Emerging Market ETFs

Markets

BNDX

IAGG

IEMG

iShares International Dividend Growth ETF

IGRO

4 iShares ETFs Delivering Holiday Cheer For Investors With Lower Fees

One of the biggest themes in the ETF universe in 2012 has been the impressive accumulation of assets by bond funds. Through the first 10 months of 2012, all bond ETFs, U.S-listed and those trading outside the U.S., raked in $114 billion in new assets. 

U.S. funds did the bulk of the work, attracting $52.8 billion through the end of October, <a href="http://eng.fundsamericas.com/news/etf/9714/Equity-ETF-and-ETP-Investors-Increase-Exposure-to-Emerging-Markets-6-Fold-in-2012?goback=.gde_110203_member_193543466">according to Funds America</a>. That means bond funds are 2012's top asset gatherers among ETFs, putting the asset class well ahead of the almost $36.7 billion hauled in by U.S.-listed emerging markets ETFs.

With fears of the fiscal cliff high and expectations from some market observers that 2013 could be another bumpy year for stocks, it is reasonable to expect bond ETFs as a group will remain proficient at gathering assets. These 10 bond ETFs could help investors weather potential storms while generating income in the year ahead. In no particular order...

PIMCO Total Return ETF (NYSE: <a class="ticker" href="/stock/bond#NYSE">BOND</a>)
Perhaps the worst thing that can be said of the PIMCO Total Return ETF, colloquially known as the "Bill Gross ETF," is that the fund's success is not surprising. Really, did anyone expect an ETF with the bond king's name attached to it to be a flop? 

A flop BOND is not. Since its February 29 inception date, BOND has accumulated <a href="http://www.pimcoetfs.com/Funds/Pages/BOND.aspx">$3.83 billion in assets under management</a>, making it the largest actively managed ETF by a wide margin. More important that superficial statistic is performance. BOND has delivered the goods there as well as the ETF has gained nearly 12 percent since its debut..

iShares Core Total U.S. Bond Market ETF (NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>)
The iShares Core Total U.S. Bond Market ETF, previously the iShares Barclays Aggregate Bond Fund, makes this list for fans of ETF competition. Not only does the fund offer investors a passively managed equivalent to BOND, it is locked in a serious battle with the Vanguard Total Bond Market ETF (NYSE: <a class="ticker" href="/stock/bnd#NYSE">BND</a>).

In fact, it is BND's paltry expense ratio of 0.1 percent that likely prompted AGG's own fee reduction to 0.08 percent. Whether or not Vanguard responds and cuts BND's fees next year remains to be seen. Also interesting will be whether or not investors embrace the low fees of AGG and BND over the allure of BOND's active management. The PIMCO offering charges 0.55 percent per year.

PowerShares Emerging Markets Sovereign Debt Portfolio (NYSE: <a class="ticker" href="/stock/pcy#NYSE">PCY</a>)
If surging bond ETF inflows represent a theme, then a sub-theme is soaring assets under management totals for emerging markets debt funds. That theme <a href="http://www.benzinga.com/markets/bonds/12/12/3156036/seasonal-trends-for-em-bonds">has been obvious throughout 2012</a> and the PowerShares Emerging Markets Sovereign Debt Portfolio has been a prime beneficiary.

Not only is PCY large with over $3 billion in AUM, it is a compelling option for income for investors for several reasons. First, is the 30-day SEC yield almost four percent. Second, is the monthly dividend. Third, most of PCY's holdings are rated investment grade, so investors are not taking on significant credit risk with this fund. 

Market Vectors Emerging Markets Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>)
Sticking with the theme of emerging markets bond ETFs, EMLC represents a fine option for the investor looking to gain exposure to non-dollar asset classes. EMLC and rival funds have shown investors <a href="http://www.benzinga.com/markets/bonds/12/12/3154114/local-currency-em-bonds-face-the-fiscal-cliff">improving credit quality and health balance sheets</a> in the emerging world can translate to solid returns.

EMLC, the WisdomTree Emerging Markets Local Debt Fund (NYSE: <a class="ticker" href="/stock/eld#NYSE">ELD</a>) and the iShares Emerging Markets Local Currency Bond Fund (NYSE: <a class="ticker" href="/stock/lemb#NYSE">LEMB</a>) have all traded noticeably higher in 2012. All three have been prodigious gainers of new assets. If 2013 turns out to be a risk on year, those trends should continue for these ETFs.

SPDR Barclays Capital High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>)
Just some folks writing off junk bond ETFs, JNK and rivals such as the iShares iBoxx $ High Yield Corporate Bond Fund (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) look to be closing 2012 on a strong note and are flirting with 52-week highs. HYG and JNK are favorite tools for gauging risk appetite because some pros view these ETFs as trading in comparable fashion to stocks.

Savvy traders keep an eye on JNK because its tracking error relative to its index is looser (worse) than HYG's. That means in lieu of a heavily traded inverse junk bond ETF (there is one, though it is thinly traded), traders that want to short junk bonds often short JNK.

Market Vectors International High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/ihy#NYSE">IHY</a>)
If there is superficial problem with HYG and JNK it is that those are the only high-yield bond ETFs the mainstream financial press pays attention to. The derivative problem is that by using HYG and JNK as the indicators for the broader junk bond ETF world, <a href="http://www.benzinga.com/markets/bonds/12/12/3144876/following-redemptions-junk-bond-etfs-at-multi-week-highs">compelling funds go ignored</a>.

The Market Vectors International High Yield Bond ETF is one such fund. When folks were crowing about outflows from HYG and JNK, they were also ignoring one of 2012's better asset-gathering stories. IHY debuted in April and now has almost $202 million in AUM. IHY has also gained more than eight percent since its debut. Anything close to those AUM and performance numbers in 2013 would make for a very successful sophomore year.

Vanguard Short-Term Inflation-Protected Securities Index ETF (NYSE: <a class="ticker" href="/stock/vtip#NYSE">VTIP</a>)
Speaking of ETFs to watch in their sophomore seasons, VTIP merits consideration. The fund debuted in October as Vanguard's first foray into the short-term TIPS market. Since there are scores of TIPS ETFs out there, VTIP encroached on someone else's territory. The iShares Barclays 0-5 Year TIPS Bond Fund (NYSE: <a class="ticker" href="/stock/stip#NYSE">STIP</a>) is one example. Again, this tussle could come down to fees. VTIP charges 0.1% per year, just half of what STIP charges. 

Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>)
Municipal bonds defied conventional wisdom in 2012. Early in the year, there was plenty of chatter regarding an increased number of municipal defaults. That chatter proved accurate and there is no getting around the fact that plenty of states, including large ones such as California and Illinois, are not in the best fiscal health.

Investors shrugged off those concerns to send <a href="http://www.benzinga.com/markets/bonds/12/11/3135673/muni-bond-etfs-jump-to-new-highs-on-cliff-fears">muni bond ETFs soaring</a>. Moreover, investors have shown little reluctance about embracing high-yield muni fare. HYD has performed like a high-beta stock, jumping nearly 18 percent to this point in 2012 while crossing the $1 billion in AUM level. 

HYD and its brethren face some important issues in 2013. First, will the tax treatment of muni bonds change for the worse as politicians seek to generate much-needed revenue? Second, for how long will investors keep ignoring municipal defaults as they hunt for yield?

WisdomTree Emerging Markets Corporate Bond Fund (NASDAQ: <a class="ticker" href="/stock/emcb#NASDAQ">EMCB</a>)
In a year when BOND, and rightfully so, has commanded most of the positive headlines relating to new bond ETFs, it has been hard for other funds to standout. However, the WisdomTree Emerging Markets Corporate Bond Fund has been a standout in its own. Bringing in almost $96 million in just 10 months of trading says as much.

Until recently, emerging markets corporate debt has not been the first destination investors think about when evaluating ex-U.S. bond options. There are signs that is starting to change amid increased issuance of these bonds and high premiums investors are forced to pay on emerging markets sovereign issues. 

For those that think EMCB's concept is too narrow or opaque, think again. The ETF has, in a way, been validated by the appearance of <a href="http://www.benzinga.com/stock-articles/emcb/all">not one, but two competitors</a>.

PowerShares Senior Loan Portfolio (NYSE: <a class="ticker" href="/stock/bkln#NYSE">BKLN</a>)
The PowerShares Senior Loan Portfolio, the first ETF to bring senior loans to the masses, has enjoyed an excellent 2012. BKLN is up 9.2 percent and while that lags the performance of HYG and JNK, it is worth noting BKLN's volatility is substantially lower than those rival high-yield funds.

BKLN's success has been a direct result of investors searching for yield and that success if proven by the fund's rapid accumulation of assets. In July, BKLN had $583 million in AUM, but that <a href="http://www.benzinga.com/markets/bonds/12/10/2976126/bank-loan-etf-going-strong">number jumped to $880 million by late September</a> and then over $1 billion by early October. As of December 7, BKLN was home to more than $1.4 billion in AUM.

As a high-yield fund, BKLN is a worthwhile risk appetite gauge and that validates it as a bond ETF to watch in 2013. What will also be interesting is that 2013 will be BKLN's first full trading year with a year competitor. The Pyxis/iBoxx Senior Loan ETF (NYSE: <a class="ticker" href="/stock/snln#NYSE">SNLN</a>) debuted in early November.

For more on bond ETFs, click <a href="http://www.benzinga.com/markets/bonds">here</a>.

Long Ideas

Short Ideas

Dividends

New ETFs

Currency ETFs

Forex

Events

Global

Econ #s

After-Hours Center

Trading Ideas

BKLN

BOND

EMCB

Market Vectors Emerging Markets Local Currency Bond ETF

EMLC

Market Vectors High Yield Municipal Index ETF

LEMB

PowerShares Emerging Markets Sovereign  Portfolio

SNLN

VTIP

10 For '13: Bond ETFs For The New Year 

Apparently <a href="http://randomroger.blogspot.com/2011/06/what-about-cash.html">yesterday's post</a> came in the middle of this week's blogosphere hot topic; Black Swan Funds/disaster strategies. New York Times Deal Book had a lengthy <a href="http://dealbook.nytimes.com/2011/06/29/a-new-investment-strategy-preparing-for-end-times/?smid=tw-nytimesbusiness&amp;seid=auto">write up</a> on the subject yesterday.
Generally I am not a fan of extreme portfolios. My willingness to take defensive action is not, I don't think, a bet on an extreme outcome with a low probability. Aside from the cliche about betting on the end of the world can only payoff once I think the returns from various foreign markets over the last ten years tells us that something akin to "regular" portfolio construction still works.
The ideas like 90% t-bills/go berserk with the rest are interesting on some level but not necessarily practical.
For whatever one of these black swan funds might cost, someone with enough motivation could probably come up with something on their own for much less money. While anyone who actually wants to do this should remember Montier's advice that you have to decide which tail you are trying to protect against I think a do it yourselfer would probably want a healthy dose of TIPs exposure. 2008 was rough on the ETFs in this space but I don't think the panic from back then is likely happen again. But even so I would suggest going shorter in maturity and now there are a couple of ETFs that offer short dated TIPS exposure include the iShares Barclays 0-5 TIPS Bond Fund (<a class="ticker" href="/stock/stip#">STIP</a>). The foreign TIP space is also intriguing, the new iShares International Inflation Linked Bond Fund (<a class="ticker" href="/stock/itip#">ITIP</a>) could be interesting.
If not foreign TIPS then some other foreign exposure either with currency or bond funds or if you have access-- actual foreign bonds. Unless the tail you are hedging against is the dollar imploding then some mix between USD and forex exposure might make sense as for now the dollar still goes up during times of panic. I would think the Aussie dollar (<a class="ticker" href="/stock/fxa#">FXA</a>), Canadian dollar (<a class="ticker" href="/stock/fxc#">FXC</a>) or Swiss franc (<a class="ticker" href="/stock/fxf#">FXF</a>) would work here.
Commodity exposure no doubt has a place at this table but it is not clear to be that gold should be the answer. Some sort of legitimate food shortage and gold might not be the answer, again I think this depends on what tail is trying to be exploited.
Another space that might be relevant is merger arbitrage. Credit Suisse has a few ETNs out there, my wife owns the Merger Fund (<a class="ticker" href="/stock/merfx#">MERFX</a>) in one of her IRAs and there are other products out there. There is a pretty good track record with these for inching higher over time in a very boring fashion which is probably ideal for this conversation.
For anyone who would consider buying a fund that spends some portion of the AUM repeatedly on out of the money put options (that will often expire worthless) then they might also consider a broad based inverse index fund. If you look at a large sample of them (again, very broad, not sector funds) you'll see that many of them "work" over longer periods of time and have been "working" for a while now. Of course they may not "work" in the future over some extended period but the result would not likely be worse than continually buying puts that usually expire worthless.
There are obviously more areas to talk about but the bigger idea is that there are enough ETPs out there to create your own end of the world portfolio and do so relatively cheaply. The most expensive thing mentioned is MERFX which has a 1.45% expense ratio.
For what it is worth I still think a relatively normal equity and fixed income portfolio with the occasional defensive action is the best way to go. 
<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/8532070-6060298392830149763?l=randomroger.blogspot.com' alt='' /></div>

Comments

iShares 0-5 Year TIPS Bond ETF

Noticias

Últimas noticias sobre iShares 0-5 Year TIPS Bond ETF (ARCA:STIP)

Noticias

SOCIO/CONTRIBUIDOR

BENZINGA GLOBAL