RAVI can be appropriate “if you don’t need absolute overnight liquidity,” said Carlson, “and are willing to live with a minor bit of price volatility.” This can include retirees who are living off fixed income and are sensitive to capital preservation, he said, as well as younger investors who are seeking some stability in a volatile market. Investors shouldn’t pay for the overnight liquidity of money-market funds if they don’t need it, he said.
Olde was attracted to RAVI because of its very low cost (its net expense ratio is 25 basis points), its active management and its decent yield. He’s talking to clients about the need to have some portion of their portfolios hedged, the need to shorten duration (to provide less downside risk if rates continue to rise) and the need to keep expenses low.
“I want to have a clear process for approaching turbulent times as well as when times are smoother,” he said.