ETF Strategies to Play Rising Yields

zacks04-03

Stocks slumped to start Q2 as an interest rate cut by the Fed may come later than anticipated before. The yield on the benchmark 10-year Treasury rose to around 4.38%, hovering at its highest levels ...

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The yield on the benchmark 10-year Treasury rose to around 4.38%, hovering at its highest levels ...</p>\n\n<a href=\"https://www.zacks.com/stock/news/2249555/etf-strategies-to-play-rising-yields\">Source Link</a>\n\n</div>\n","source":"zacks_fund_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>ETF Strategies to Play Rising Yields</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nETF Strategies to Play Rising Yields\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-03 12:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.zacks.com/stock/news/2249555/etf-strategies-to-play-rising-yields><strong>zacks</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Stocks slumped to start Q2 as an interest rate cut by the Fed may come later than anticipated before. The yield on the benchmark 10-year Treasury rose to around 4.38%, hovering at its highest levels ...</p>\n\n<a href=\"https://www.zacks.com/stock/news/2249555/etf-strategies-to-play-rising-yields\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FDN","symbol_name":"First Trust Dow Jones Internet I","start_time":0,"source_url":"https://www.zacks.com/stock/news/2249555/etf-strategies-to-play-rising-yields","article_id":"2424181193","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2424181193","pubTimestamp":1712116800,"sourceInfo":{"source_id":"zacks_fund_highlight","name":"Zacks"},"weMediaInfo":null,"summary":"We believe cash and short-dated fixed income may play a greater role in adding stability to a portfolio. This is especially true given that the Fed may keep on hiking rates this year an","collect":0,"end_time":0,"defaultTopTitle":"zacks.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"FDN":"First Trust Dow Jones Internet I","PGHY":"Invesco Global Short Term High Yield Bond ETF","BK4585":"ETF&股票定投概念","BK4550":"红杉资本持仓","BK4588":"碎股","REK":"ProShares Short Real Estate"},"translate_title":"利用收益率上升的ETF策略","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"FDN":1,"PGHY":1,"REK":1},"content_text":"Stocks slumped to start Q2 as an interest rate cut by the Fed may come later than anticipated before. The yield on the benchmark 10-year Treasury rose to around 4.38%, hovering at its highest levels of 2024, up from 3.95% recorded at the start of 2024.The U.S. economy has been showing surprising level of resilience. Hotter-than-expected manufacturing readings, which came alongside increases in prices paid, have led to doubts that the Fed will cut rates in the first half of the year.According to the CME FedWatch Tool, there is a 97.1% chance that the Fed will keep rates the same in the May meeting. For the mid-June meeting, there is a 61.8% chance of a 25-basis point rate cut. In short,despite earlier speculations of rate cuts as early as in the first half of 2024, market watchers now expect the Fed to act not before the second half of 2024. The FOMC emphasized the need for greater confidence in sustained inflation movement towards the target level.Given this, investors must be interested in finding out all possible strategies to weather a sudden jump in the benchmark interest rates. For them, below we highlighted a few investing tricks that could gift investors with gains in a rising rate environment.Tap Senior Loan ETFsSenior loans are floating rate instruments thus providing protection from rising interest rates.  This is because senior loans usually have rates set at a specific level above LIBOR and are reset periodically which help in eliminating interest rate risk. Further, as the securities are senior to other forms of debt or equity, senior bank loans offer lower default risks even after belonging to the junk bond space.Virtus Seix Senior Loan ETF (SEIX Quick QuoteSEIX  -  Free Report)    , which yields about 9.09% annually and Invesco Senior Loan ETF (BKLN Quick QuoteBKLN  -  Free Report)    , which yields 8.76% annually are good picks here.Play Floating Rate Bond ETFsThe floating rate bond has been an area to watch lately amid rising rate environment. Floating rate bonds are investment grade and do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index (such as LIBOR) plus a variable spread depending on the credit risk of issuers.Since the coupons of these bonds are adjusted periodically, these are less sensitive to an increase in rates compared to the traditional bonds. Unlike fixed-coupon bonds, these do not lose value when the rates go up, making the bonds ideal for protecting investors against capital erosion in a rising rate environment.iShares Floating Rate Bond ETF (FLOT Quick QuoteFLOT  -  Free Report)     (yields 6.29% annually) and iShares Treasury Floating Rate Bond ETF (TFLO Quick QuoteTFLO  -  Free Report)     (yields 5.62% annually) are two examples in this category.Time for Cash-Like ETFs?We believe cash and short-dated fixed income may play a greater role in adding stability to a portfolio. This is especially true given that the Fed may keep on hiking rates this year and short-term bond yields will rise alongside. That would result in a similar rate for cash-like assets such as money-market funds.Investing options include JPMorgan UltraShort Income ETF (JPST Quick QuoteJPST  -  Free Report)     (yields 5.45% annually), Invesco Global Short Term High Yield Bond ETF (PGHY) (yields 8.15% annually), and Fidelity Low Duration Bond Factor ETF (FLDR Quick QuoteFLDR  -  Free Report)     (yields 5.48% annually). Such short-term bond ETFs also have lower interest rate sensitivity.Hedge Rising Rates With Niche ETFsThere are some niche ETFs that guard against rising rates. These ETF options are: Simplify Interest Rate Hedge ETF PFIX, Global X Interest Rate Hedge ETF (RATE Quick QuoteRATE  -  Free Report)     and Foliobeyond Rising Rates ETF RISR.Go Short with Rate-Sensitive SectorsNeedless to say, sectors that perform well in a low interest rate environment and offer higher yield, may falter when rates rise. Since real estate and utilities are such sectors, it is better to go for inverse REIT or utility ETFs.ProShares UltraShort Real Estate (SRS Quick QuoteSRS  -  Free Report)    , ProShares Short Real Estate (REK) and ProShares UltraShort Utilities (SDP Quick QuoteSDP  -  Free Report)     are such inverse ETFs that could be wining bets in a rising rate environment.Short U.S. TreasuriesPlus, shorting U.S. treasuries is also a great option in this type of a volatile environment. The picks include ProShares UltraShort 20+ Year Treasury ETF (TBT Quick QuoteTBT  -  Free Report)    , Direxion Daily 20+ Year Treasury Bear 3x Shares (TMV Quick QuoteTMV  -  Free Report)     and ProShares UltraShort 7-10 Year Treasury (PST Quick QuotePST  -  Free Report)    .","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2424181193"}