4 ETFs to Maximize Returns, Minimize Volatility

Investors betting on falling interest rates - or rising Treasury bond prices - have flooded into the iShares 20+ Year Treasury Bond (TLT) - Get Report , sending it up over 15 percent year-to-date. Nevertheless, Doug Hedley, CIO of Paritas Capital Management, prefers the iShares 7-10 Year Treasury Bond (IEF) - Get Report for his portfolio because it has less risk. 'You can look at some of the shorter term plays or obviously go out longer to TLT, but I think you run into some interest rate risk should we get a back-up in rates,' said Hedley. Paritas operates a globally diversified, quantitatively-driven and risk-weighted portfolio called Alpha Foundations that invests in exchange traded funds (ETFs). The portfolio is rebalanced every 30 days. Hedley also owns the Utilities Select Sector SPDR ETF (XLU) - Get Report in his portfolio. The XLU has had a great run in 2016, rising almost 20 percent. But Hedley said he is not going to seriously reduce the position until he sees a step-up in volatility in his model.