HomeMost PopularExploring Ultra-Short Strategies for Volatile Markets

Exploring Ultra-Short Strategies for Volatile Markets

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Amidst the prevailing uncertainty shrouding economic forecasts, investors and traders find themselves at a crossroads, grappling with the elusive path the economy may traverse.

Fortune’s disclosure of a recent Deutsche Bank survey unveils a staggering revelation: 45% of investors foresee a scenario where the U.S. economy experiences a β€œno landing” outcome, characterized by sustained inflation levels above the Federal Reserve’s 2% target amid robust growth. Intriguingly, a significant 19% of respondents confessed their uncertainty about the impending U.S. recession, marking a 16% increase from last year’s poll.

With the landscape of 2024 shrouded in ambiguity, prudent investors must seek refuge in strategies capable of weathering potential economic storms. In these turbulent times, ultra-short investment vehicles emerge as a beacon of stability worth considering.

Delving into Ultra-Short Possibilities

One prominent player in the ultra-short investment sphere is the Eaton Vance Ultra-Short Income ETF (EVSB) from Morgan Stanley’s repertoire of ETFs. This actively managed fund focuses on income generation, predominantly investing in a spectrum of short-term securities encompassing floating-rate, fixed, and variable options. While the lion’s share of its portfolio features investment-grade securities, EVSB tactically allocates up to 10% of net assets towards junk bonds. Boasting a meager net expense ratio of 0.17%, the fund has garnered over $17 million in net flows over the past quarter.

Alternatively, investors can explore the Calvert Ultra-Short Investment Grade ETF (CVSB), a fund that integrates ESG criteria into stock assessments. Like EVSB, CVSB pursues an actively managed approach, funneling its assets into investment-grade securities. With a modest net expense ratio of 0.24%, CVSB allows up to 50% of net assets to be invested in asset-backed or mortgage-backed securities issued by U.S. government agencies. Moreover, the fund may allocate up to 25% of its investments in foreign debt securities, showcasing its diversified approach. Noteworthy is CVSB’s commendable performance, registering nearly a 7% uptick over the last year.

Both CVSB and EVSB serve as potent shields against potential interest rate fluctuations, boasting low expense ratios and a high likelihood of tax efficiency. Consequently, these ultra-short options offer a safe harbor for investors amidst the ongoing market volatility while they await the Federal Reserve’s next maneuver.

For further news, insights, and commentary, visit the ETF Yield Channel.

The insights and opinions articulated herein reflect the perspective of the author and may not align with those of Nasdaq, Inc.

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