Posted on 05/21/2012
The Fixed Income asset class is known for its relative 'safety' and low volatility. Not only does it provide income for investors, it also has the ability to provide the protection of principal as well as capital appreciation in certain cases. Currently the 3 Year Monthly Standard Deviation of the Fixed Income asset class, using the Vanguard Total Bond Market ETF (BND) as the benchmark, is 2.98, the lowest standard deviation when compared against benchmarks from Commodities, International Equities, Foreign Currency, US Dollar, and US Equities. In addition, this asset class is not known for wide dispersions of returns within the asset class. The yearly average from best to worst between 1998 to 2011 is only 39.39%, however, in recent years, we have seen the differential within the Fixed Income asset increase to some extent. Last year in 2011, the differential was 66.11%. In a sense, this means that individual Fixed Income markets have been somewhat more volatile under the surface on a near term basis.
Today, we want to offer you a quick list of Fixed Income ETFs. We put in a few criteria in our selection that focus on both the volatiilty and income. Below are the criteria we use in the Fixed Income space:
- Average Volume >= 100000
- Yield >= 2%
- Standard Deviation <= 5