This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Controlling Your Duration with Innovative ETFs

Stocks in this article: BSCG

By Michael Fabian NEW YORK ( Fabian Capital Management) -- The volatility in interest rates this year has been particularly troublesome for fixed-income investors.

Much of the jump in long-term Treasury bond yields has been due to the quicker-than-expected improvement in the labor market, thereby putting pressure on the Federal Reserve to begin tapering its asset-purchase programs in 2013. The unrelenting rise in stock prices, combined with investors pouring assets into equity-oriented funds at a breakneck pace, has also put downward pressure on fixed-income sentiment.

This has been a wakeup call for investors to begin paying closer attention to their fixed-income holdings, and examine them for potential weaknesses.

Investors who own traditional core fixed-income funds now face a challenge: Continue to hang on, as rates creep higher and indexes ultimately rotate to higher-yielding bonds, or sell, and forego the cash-flow benefit of fixed-income altogether?

Investors who have a portfolio made up of individual bond issues have a very different set of concerns than holders of traditional bond funds. This is primarily because a fund will continue its duration into perpetuity, as there is no fixed maturity date. It will simply roll short-maturity holdings forward, based on the investment objectives of the fund.

Naturally the advantage to owning a fund is the ease of use and diversification you get for holding just one security in your portfolio.

Conversely, the obvious advantages to owning individual bonds is the ability to latter a basket of credits, and then allow them to mature at par. This enables the investor to participate in the income component, yet not get wrapped up in the pricing anomalies in relation to Treasury bonds.

Furthermore, after maturity, you have the option of either rolling proceeds over to higher-yielding bonds if a rising rate environment persists, or just sitting in cash to await better opportunities.

Several years ago, Accretive Asset Management launched the innovative BulletShares Indexes to offer a unique index methodology, in which bonds are grouped together based on their maturity date.

The BulletShares ETFs, currently managed by Guggenheim, continue to be based on the target-date fund philosophy designed to satisfy the needs of both individual-issue and bond-fund investors.

Accretive recently partnered with NASDAQ OMX Global Indexes to further develop the family and rebrand the indexes NASDAQ BulletShares Indexes.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs