How to best position for rate cuts

Long-term yields might be the best bond investment this year, according to one exchange-traded fund expert.

“The iShares 20-year Treasury ETF (TLT) will get the biggest bang for its buck [and] some of the intermediate-term products like the Vanguard Intermediate-Term Corp Bond (VCIT) will get some bang for the buck,” VettaFi’s Todd Rosenbluth told CNBC’s “ETF Edge” on Monday.

Rosenbluth added that while the short-term products were very popular last year, they will “largely tread water or earn a little more than their overall income.”

The firm’s head of research reasons that if the Federal Reserve cuts interest rates more than expected then investors should stay in longer-term products to benefit.

In the same interview, BNY Mellon’s Benjamin Slavin noted that while flows moved into ultra-short or short-term government ETFs and money market funds in 2023, the story changed toward the end of the year.

“We saw a lot of money start to move out of the short end of the curve into intermediate duration,” said Slavin, the company’s global head of ETFs.

“You started to see that picture start to emerge where advisors are looking and retail investors are looking to capture or lock in those higher yields, and also potentially get some capital appreciation as rates back up,” he added.


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