Thursday 13 June 2024

I have been buying these ETF since FED signalled no more rate hike

 Last night (Singapore time), the Federal Reserve kept its key interest rate unchanged and indicated that there will be one rate cute before end of this year. Now that there is clarity on the direction of the interest rates, what does one need to prepare so that he can benefit when the rate cut happens.

In this article by Schroders, both stocks and Bonds have significantly outperformed cash following the rate cut. If a recession does not ensue, stocks typically fare better than Bonds. However, in the event of a recession, Bonds generally outperform stocks. Since the initial rate hike, Bonds have faced substantial correction, but long-term bonds now offer attractive yields. In anyway, one should have a proportion of Bonds asset as part of the asset allocation of ones' portfolio. 

As the Bonds have now presented an attractive yield, and as well as potential capital gain due to rate cut, these are the Bonds ETF which I have included into my portfolio: 

  1. IDTL ETF - iShares $ Treasury Bond 20+yr UCITS ETF
  2. IDTM ETF - iShares $ Treasury Bond 7-10yr UCITS ETF
  3. LQDE ETF - iShares $ Corp Bond UCITS ETF
Please dyodd.


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