Expert insight
Sara Devereux on a new era for fixed income
December 20, 2023
As a Bloomberg commentator observed in this 4-minute video, Vanguard’s low costs give it a major advantage with active fixed income ETFs. Other investment firms have to take on more risk to deliver the same returns after costs. But our global head of fixed income explains that low costs provide other advantages as well.
In the Bloomberg ETF IQ segment, Vanguard’s Sara Devereux said materially lower fees also allow smarter, more discretionary risk-taking. That is an even bigger advantage in what could be a volatile bond market ahead.
Vanguard economists say interest rate cuts are likely in late 2024, but higher real (inflation-adjusted) rates are probably here to stay for the next decade, meaning higher returns over the long run and a new era for fixed income. That doesn’t mean it’s all smooth sailing ahead. But greater volatility also brings greater dispersion in returns, an opportunity for active managers to add value, Devereux said.
Watch the video to hear more from Devereux about today’s market environment.
Related links:
- Why investors benefit from a return to sound money (3-minute video, issued December 2023)
- Vanguard economic and market outlook for 2024: A return to sound money (24-page PDF, issued December 2023)
- Considerations for ETF trading strategies (article, issued December 2023)
Notes:
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