There are more than enough market influences to induce volatility right now. It is indicative in the CBOE Volatility index (VIX), which is up almost 80% in 2022.
Of course, the latest market moves are not primarily the byproduct of inflationary pressures. The world is keeping an eye on the crisis in Ukraine, which has only increased volatility in the capital markets.
“It’s about managing the risks over the weekend. With the situation between Ukraine and Russia, headlines may appear and change the picture. Although this is a topical issue, we will see a lot of it, especially on Fridays,” said James Athey, investment manager at abrdn.
One way to manage risk is to move into safe-haven assets like treasury bills. However, for investors who also want an element of yield while they put their money in government debt, they can look to longer duration options.
Investors who seek the safe limits of US Treasuries, but want more yield, can go further up the yield curve and gain longer duration exposure. One Vanguard option to consider is the Vanguard Long Term Cash Index Fund ETFs Shares (VGLT ).
The fund seeks to track the performance of a market-weighted Treasury index with a dollar-weighted long-term average maturity. The fund uses an index investing approach designed to track the performance of the Bloomberg US Long Treasury Bond Index, which includes fixed income securities issued by the US Treasury (excluding inflation-protected bonds) with maturities greater than 10 years.
The fund has a 30 day period SECOND yield of 2.29% as of March 3. What’s more, VGLT has a low expense ratio of only 4 basis points.
For more news, insights and strategy, visit the Fixed Income Channel.