To help diversify bond portfolios, he and Andres encourage independent advisors to seek out subadvisors willing to work with them even on their smaller accounts. They also suggest looking at “A”-rated essential service bonds, which support electricity, water and things that people need to live.
William Belden, head of ETF business development at Guggenheim Investments, pointed out during a recent Charles Schwab conference call for journalists that some fixed-income ETFs now offer defined-maturity dates and that more ladders are being built into the investment-grade and high-yield space.
By using laddering to take a barbell approach that ties shorter-duration and longer-duration exposure, he said, “you can end up with a pretty attractive portfolio construction that should perform well in the market that we’re in right now.”
Andres emphasizes, “Every basis point counts in a low rate environment.” And, he says, “Even if the Fed raises rates two, three, four times, we’re still going to be in a very low interest rate environment.”