Even as central banks cut rates, investors and advisors can still find attractive opportunities in fixed income. But, as Rick Rieder, BlackRock’s chief investment officer explains, it’s about knowing where to look.
Yields are seen to be attractive right now, he says, as central banks are still in the early innings of the rate-cutting cycle, Rieder explains. As a result, real rates are holding up, particularly in areas like high-yield securitized assets and emerging market infrastructure.
“You’re buying things in fixed income with really good credit quality and at a good price,” he says.
- For more information check out the Fall 2024 ETF implementation guide (rbcgam.com)
While investing in bond ETFs that track an index provided investors with an efficient way to access fixed income when central banks were raising rates, there’s a case to be made that actively managed ETF strategies may be better positioned in the current market.
“One of the secrets of fixed income is that you can provide more yield than an index,” says Rieder. “More and more people are seeing that fixed income managers can outperform indices.”
Active strategies can have an edge in this market because they are unconstrained, allowing investors and advisors to optimize their fixed income portfolio, explains Rieder. “If you eliminate the parts of fixed income that don’t have any value add, you’re starting out ahead,” he says. “But to pick out the best parts, you need a big research team around the world to find the best places to do it.”
Blackrock’s scale, which is backed by sophisticated risk management systems that consider different scenarios and correlations that could impact the portfolio, allows it to find the best opportunities around the world. “It’s hard for an individual to do,” says Rieder. “Let us do all the work.”
RBC iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset Management Inc. (RBC GAM) and iShares ETFs managed by BlackRock Asset Management Canada Limited (“BlackRock Canada”). Commissions, trailing commissions, management fees and expenses all may be associated with investing in exchange-traded funds (ETFs). Please read the relevant prospectus or ETF Facts document before investing. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.
This has been provided for informational purposes, as of the date noted only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. BlackRock Canada and RBC GAM take reasonable steps to provide up-to-date, accurate and reliable information, and believes the information to be so when provided. Past performance is no guarantee of future results. Interest rates, market conditions, tax rulings and other investment factors are subject to rapid change which may materially impact analysis that is included in this document. You should consult with your advisor before taking any action based upon the information contained in this document. All opinions constitute our judgment as of the dates indicated, are subject to change without notice and are provided in good faith without legal responsibility. Information obtained from third parties is believed to be reliable but BlackRock Canada and RBC GAM and its affiliates assume no responsibility for any errors or omissions or for any loss or damage suffered. BlackRock Canada and RBC GAM reserves the right at any time and without notice to change, amend or cease publication of the information.
® / TM Trademark(s) of Royal Bank of Canada. Used under licence. iSHARES is a registered trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. Used under licence. © 2023 RBC Global Asset Management Inc. and BlackRock Asset Management Canada Limited. All rights reserved