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Short-term investment-grade bond strategies, with durations in the two-to-three-year range, are well positioned to capture a meaningful yield advantage without the rate sensitivity that has challenged longer duration strategies in recent months. The yield to worst on a diversified short-term bond portfolio currently sits between 4.5% and 5.0%, more than 100 basis points above what bank savings accounts and government money market funds are currently yielding. Although the path for rates is highly uncertain, the range of outcomes in which short-term bonds outperform cash is considerably wider than the range in which they don't.
Last year's rate cuts still linger in the minds of advisors and fixed income investors. They may be inclined to focus on intermediate-term and longer-dated bonds and the related ETFs.
Focus Partners Advisor Solutions LLC boosted its holdings in Schwab 1-5 Year Corporate Bond ETF (NYSEARCA:SCHJ) by 114.5% during the third quarter, according to the company in its most recent disclosure with the SEC. The firm owned 40,194 shares of the company's stock after purchasing an additional 21,457 shares during the quarter.
Schwab 1-5 Year Corporate Bond ETF (NYSEARCA:SCHJ - Get Free Report)'s stock price shot up 0.1% during trading on Tuesday. The stock traded as high as $24.92 and last traded at $24.92. 282,983 shares traded hands during mid-day trading, an increase of 116% from the average session volume of 131,205 shares. The stock had
The Schwab 1-5 Year Corporate Bond ETF offers a low expense ratio and moderate duration. The yield curve already takes into account rate cuts but inflation is still at around 3%. While there is some indication that economic pressure could moderate inflation, it's not clear yet in the data that it is having that effect.
Inflation expectations have spiked, raising doubts about the inflation battle and posing risks to CPI, especially with oil comps toughening MoM. SCHJ's 2.6-year duration isn't that high, but it's high enough considering the intensity of the inflation expectation spike and contradictory downward shift of the yield curve. Credit spreads have at least climbed a little, reflecting the complexity of the current landscape, which doesn't just concern anchoring risks but also inflation shocks from tariffs.
SCHJ holds 1-5 year investment-grade corporate bonds, with a balanced mix of A-rated and BBB bonds, primarily from the industrial and financial sectors. Rate cuts are expected in 2024, but the market has already priced in more cuts than likely, limiting SCHJ's appreciation potential. SCHJ offers a low-duration, low-price risk investment with a 4.54% yield, making it potentially suitable for income-focused investors with low-risk tolerance.
WESTLAKE, Texas--(BUSINESS WIRE)--Schwab Asset Management™, the asset management arm of The Charles Schwab Corporation and the fifth-largest provider1 of ETFs, today announced the reduction of operating expense ratios for the Schwab High Yield Bond ETF (SCYB) and the Schwab U.S. TIPS ETF (SCHP), bringing the fees for Schwab Asset Management's entire lineup of fixed income ETFs to only three basis points. All of Schwab Asset Management's fixed income ETFs are now among the lowest-priced ETFs in.