Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Head of Fixed Income Strategy
Summary: As interest rates peak, investors are offered the opportunity to diversify risk in their portfolio by adding bond exposure. However, gaining exposure to specific bonds might be challenging. Bonds ETFs provide an easy way to diversify within this space while maximizing liquidity and transparency.
As interest rates peak, investors are offered the opportunity to diversify risk in their portfolio by adding bond exposure.
However, trading cash bonds may be difficult for many investors as they trade over-the-counter (OTC), hence lacking the market transparency that stocks have. In some instances, especially in the high-yield corporate bond space, liquidity is extremely poor, and broker markups can be substantial.
In contrast, Bond ETFs offer diversity, liquidity, and price transparency, providing investors an effective tool to gain exposure to this market. Below, we look at the pros and cons of buying a bond ETF and highlight some instruments available in the Saxo Platform.
Inflation still poses a risk for investors, but the moment for increasing one’s portfolio duration may be coming at the end of the year when central banks might be forced to ease the economy. Until the case for central banks to turn dovish doesn’t materialize, we favor short-term, high-quality fixed-income securities. Please refer to Saxo’s quarterly bond outlook for details.
It’s easy! Click on “TRADING” -> “SCREENER” -> screen for “ETFs” and under “CATEGORIES” select the fixed income funds you would like to visualize
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