Arabic version: المستثمرون يحوّلون حيازات الأمان إلى صناديق السندات فائقة القِصر
According to Cnbc, investors taking some record equity gains off the table are increasingly using short-term investments, particularly ultra-short bond funds, as they weigh downside risk in the stock market. Bank deposits are paying average yields well under 1%, while long-term bonds have lost money and face volatility in an uncertain rate environment.
Brookwood Investment Group raised cash in its model portfolios to about 5% from roughly 2% in June, chief investment officer Christopher Coolidge said. The firm builds its cash allocation with ultra-short ETFs that combine Treasury exposure, floating-rate securities, active credit management and option-enhanced income strategies. Hyphen Wealth Management also uses short-duration bond funds and money market funds for liquidity.
Ultra-short bond funds generally invest in fixed-income securities maturing in under one year, including government bonds, investment-grade corporate debt, asset-backed securities and commercial paper. Such ETFs received $12.8 billion of inflows in July, according to Morningstar Direct. Coolidge said ultra-short funds can add 75 to 110 basis points over money market ETFs with comparable duration and interest-rate sensitivity.
Money market funds offer an alternative for investors seeking to eliminate rate risk. Money market ETFs held $24 billion across nine U.S. funds at the end of July, compared with $7.7 trillion in money market mutual funds, Morningstar data showed. From January through July, money market ETFs recorded $18.7 billion in net inflows, versus $2.8 billion for money market mutual funds.
Advisers cautioned against moving entirely to cash or trying to time the market. Cyrus Amini of Hyphen Wealth Management said rebalancing after equity gains can reduce risk, while Mike Bisaro of StraightLine said portfolio equity exposure should reflect age, assets, liabilities and risk tolerance. At the end of June, Morningstar data showed about 64% of money in stock funds, 18% in bond funds and 17.5% in money markets.
