Prudent investors loading up on cash might want to think about other possibilities.
Matthew Bartolini of SPDR Exchange Traded Funds claims that in addition to offering stability and income, active management can also increase their upside potential.
“Active fixed income has been a really reliable source of support for the active [ETF] construct—not just from flows but also from returns,” the managing director and head of research at the company stated this week on CNBC’s “ETF Edge.”
According to Bartolini, the strategies offer investors increased flexibility along with improved tax efficiencies and consistent performance.
Additionally, he thinks that the returns for the future appear better than they have in the past.
Bartolini, who believes that active management has significant advantages, continued, “But with higher returns comes higher volatility.” “Creating portfolios that can generate income returns while maximizing the amount of risk they are taking to get those because yields are high” is the theme we keep coming back to with investors.
“Very difficult to persuade people to consider bonds”
Betterment’s vice president of behavioral finance and investing, Dan Egan, stated that it is “very, very difficult” to take money out of an investor’s account.
“When you can get that risk-free, it’s very hard to get people to think about bonds,” he remarked. “Remember that people’s sense of safety is greatly influenced by FDIC insurance.”
On its website as of Friday, Betterment lists 4.75% APY for its variable high-yield cash account. Additionally, a three-month promotional rate of 5.50% is being offered to new customers.
