According to a recent commentary by Rick Rieder, BlackRock's, CIO for fundamental fixed income, “Investors will have to learn how to navigate shorter economic and market cycles, as well as contend with persistently lower rates, which are both likely to be hallmarks of the economic and investment landscape for some time to come.”
So what’s a fixed-income investor to do?
There’s always municipal, corporate and sovereign debt, all of which are accessible through a variety of low-cost exchange traded funds.
“We’ve seen a lot of fund flows into high-yield corporate bond funds and emerging market bond funds, two real hot areas this year,” said Miriam Sjoblom, associate director of fund analysis at research firm Morningstar.
Another popular area, she says, has been high-yield muni bond funds, which invest in lower-quality credits.
Muni bond funds in particular have been sturdy for two years, according to Morningstar, but some analysts say they may be too expensive now.
“There’s been a ton of flows into municipal bond funds, and that’s been driving the prices up, so returns have been good,” Sjoblom said. “Munis now look pretty expensive. The yields are at all-time lows, so while there’s some long-term merit to munis, investors should be cautious.”Page 2 of 4 | Prev Page | Next Page