As markets remain volatile and key data points loom, Jared Levy, Chief Markets Strategist at Peak American Investment Advisors, highlights a compelling opportunity for investors seeking stability and income: the iShares SDHY ETF.
This short-duration high-yield bond ETF focuses on corporate bonds offering attractive yields of 6-7%. It’s a strategic play for investors aiming to park funds in a relatively secure yet profitable asset. “As interest rates come down, not only do you get the 6% yield, but the ETF itself can appreciate another 5-10%+,” Jared explains.
With rising 10-year Treasury yields pressuring credit costs and impacting sectors like housing and tech, SDHY offers a conservative way to hedge against these challenges in longer duration bonds. Jared believes the Fed will have more control over the shorter end of the yield curve and that these companies will continue to meet obligations over the next year or two, making SDHY a viable shorter-term option for investors who are looking for solid returns in what’s been a choppy quarter of trading in both stocks and bonds.
Unemployment claims and PMI data this week will shed light on economic health and could influence the Federal Reserve’s decisions. If the Fed skips a December rate cut, market volatility could intensify. SDHY provides a bit of a buffer in such uncertain conditions, combining income with growth potential.
For investors looking for a smart, conservative trade to ride out market turbulence, SDHY might be a good fit. With its short duration and high yield, it offers a balance of risk and reward as long as economic conditions do not deteriorate extremely fast.
CLICK HERE to watch Jared Levy on Business First AM covering this trade.
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