[video] Bond ETFs Buyers Should Keep It Short and Sweet in 2014
NEW YORK (TheStreet) -- Here's a tip for bond ETF buyers in 2014: Keep it short!
The yield on the 10 year Treasury note has spiked from 1.8% to more than 2.9% so far in 2013. Most analysts expect interest rates will continue to move higher in the coming year and that's why exchange traded fund investors seeking to initiate or increase their fixed income positions should consider short term bond ETFs.
"Low duration ETFs will hold up better in 2014 as the Fed begins to unwind its bond-buying program," says S&P Capital IQ Sr. Analyst Todd Rosenbluth. "We also like floating rate bond ETFs that will see their yields rise with rates."
Rosenbluth's favorite floating rate ETF is the iShares Floating Rate ETF (FLOT), which at last check sports a yield of .55%.For those seeking a higher coupon, yet still wanting to stay at the front end of the yield curve, Rosenbluth recommends the SPDR Short Term High Yield ETF (SJNK), which offers a yield of 5.5%. "SJNK offers high yield exposure at a low cost and with less interest rate risk," says Rosenbluth. Remember folks. Keep it short and it may make for a sweet year. -- Written by Gregg Greenberg Follow @5gsonthestreet
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