Fed Cuts Rates—
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.
Kevin Flanagan on the Barbell Approach
What is a barbell strategy? We use two of our fixed income Funds, USFR and AGGY, to create a balance between long-term income potential and short-term duration reduction. The desired outcome? Enhanced yield and lower interest rate risk.
Kevin Flanagan, WisdomTree’s Head of Fixed Income Strategy, joins NYSE’s Judy Shaw and Matt Kobach for an episode of What’s the Fund to discuss the barbell strategy.
Commentaries from Kevin Flanagan
Like a Good Neighbor, the Fed Is There
The Fed has done what was widely expected−it cut the federal funds target range by a quarter-point. And while you could say the Fed is back in data-dependent mode, it appears as if monetary policy is still leaning toward another rate cut this year.
No Heavy Lifting Required
When looking at the money and bond markets, they almost seem to be saying to the Federal Reserve (Fed), “Would you please cut rates already?” Against this backdrop, we continue to advocate for a solution designed to help fixed income investors navigate the waters that loom ahead without making a high conviction bet on where rates are headed: the barbell strategy.
“Barbell”ing Can Get the Job Done
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.