Bonds Fed rate cuts former Goldman Sachs ETF head
Bonds can be more than a safe haven.
Tony Kelly, former Goldman Sachs Asset Management global head of ETFs at BondBloxx ETFs, suggests this is also where investors can play offense due to market conditions.
“It’s definitely getting more nuanced,” the firm’s co-founder told CNBC’s “ETF Edge” this week.. “Advisors are being a little more thoughtful because there are more opportunities in fixed income now that rates are no longer near zero [percent]”
The Federal Reserve cut interest rates by a quarter point on Wednesday — its second move this year. The decision reduced the benchmark interest rate to 3.75%-4%, which is still well above zero.
Meanwhile, the criterion 10-year Treasury Bill yield After the last decision, it rose above 4% again. Yields fell nearly 2% last month and are down nearly 11% so far this year.
Kelly, whose firm specializes in fixed-income exchange-traded funds, sees bonds evolving into an active source of diversification, income and tactical opportunity.
Kelly argues that emerging market debt is a standout performer.
“[It’s] “It is one of the asset classes that has provided the highest returns in the fixed income market this year,” he said.
Kelly also sees growing interest in private credit ETFs, which allow investors to earn institutional-style returns with daily liquidity.
“I don’t know if this is necessarily what you’d call plain vanilla, but there’s a lot of interest in having this subset of the fixed income asset class included in an ETF suite for clients,” Kelly said. “We currently have a dedicated credit ETF product in the market. We also have one in the registration phase.”
