Enhance Yield with a Barbell Strategy
With uncertain Fed and global policy, fixed income investors may be struggling to position their portfolios. In times like these, we believe the best approach may be to use a time-tested strategy.
What is a barbell strategy? We use two of our fixed income Funds, USFR and AGGY, to seek a balance between long-term income potential and short-term duration reduction. The desired outcome? Enhanced yield and lower interest rate risk.
Commentaries from Kevin Flanagan
While 2019 thus far has been, generally, a year of falling rates, going forward, the path seems less certain for a host of reasons. Against this investment backdrop, we continue to advocate for investors to consider the barbell approach when looking for fixed income solutions for 2020 and beyond.
As widely expected, the Federal Reserve once again voted to cut rates at its October FOMC meeting, the third time in 2019. The question that now comes to mind is whether the third time’s a charm.
It’s hard to say where interest rates are headed in this uncertain landscape. Kevin Flanagan offers fixed income investors a strategic solution designed to help navigate the choppy waters that could potentially loom ahead without making a “high-conviction bet” on where rates are headed.
The WisdomTree Barbell Strategy
When USFR is used in conjunction with AGGY we believe it's possible to generate the yield of the Bloomberg Barclays U.S. Aggregate Bond Index (Agg) with significantly less duration, or interest rate risk.