Hi all,
I have been following this site for about a year now and have all my retirement funds in ETF's one of which is ishares XBB bond fund. Given the low rate of interest and the impending interest rate rise should one think of switching out of XBB and into some other fixed income vehicle of lower maturity?
Off the top of my head I think the average maturity in the XBB fund is around 6 years give or take. From what I've read, for every 1% increase in interest rates the XBB fund return will be reduced by around 6%. I hope I understand this correctly. Funds with shorter maturities should do better in a rising interest rate environment.
I generally don't try to time the market at all and this is really not that. I'm trying to find out if I need to re-allocate my fixed income portion to some other fund that might work better in a rising interest rate environment.
I'm thinking of maybe XSB instead or maybe keep 1/2 in XBB and move 1/2 to XSB.
thoughts?
thanks,
Freddie
I have been following this site for about a year now and have all my retirement funds in ETF's one of which is ishares XBB bond fund. Given the low rate of interest and the impending interest rate rise should one think of switching out of XBB and into some other fixed income vehicle of lower maturity?
Off the top of my head I think the average maturity in the XBB fund is around 6 years give or take. From what I've read, for every 1% increase in interest rates the XBB fund return will be reduced by around 6%. I hope I understand this correctly. Funds with shorter maturities should do better in a rising interest rate environment.
I generally don't try to time the market at all and this is really not that. I'm trying to find out if I need to re-allocate my fixed income portion to some other fund that might work better in a rising interest rate environment.
I'm thinking of maybe XSB instead or maybe keep 1/2 in XBB and move 1/2 to XSB.
thoughts?
thanks,
Freddie