What's a poor fixed-income investor to do?

In choosing ETFs, focus on the factors you can control.

Yves Rebetez 31 May, 2016 | 5:00PM
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More than seven years after the extraordinary measures taken by central banks to counter the great recession of 2008-2009, fixed-income investors continue to face a hostile market environment. Oppressive monetary policies have deprived them of any decent yield on their money, a reality which at least in part has been masked by a total-returns picture bolstered by gains on bonds purchased when prevalent yields were higher. This will change.

Worse still, some countries such as Japan and Switzerland have adopted negative interest-rate policies. This has resulted in savers paying for the privilege of making deposits. Mercifully, negative rates haven't taken hold in North America. Even so, real yields after inflation are very much in negative territory along most of the yield curve.

Will central bankers ultimately succeed in bringing about higher rates, while perhaps tolerating first a bout of higher inflation? Your returns under that scenario won't look that hot.

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About Author

Yves Rebetez

Yves Rebetez  Yves Rebetez, CFA, is managing director of ETF Insight. He specializes in research and analysis of ETFs and closed-end funds. Before launching his independent firm, he was vice-president of ETFs and structured products with RBC Dominion Securities. He also worked as a portfolio advisor or portfolio manager at RBC Dominion Securities, Credit Suisse Canada and UBS in Switzerland.

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