Fixed Income Exchange Traded Funds (ETFs) are popular investment vehicles that provide investors with exposure to bonds and other fixed-income securities. These funds have gained traction among both individual and institutional investors due to their ability to offer diversification, liquidity, and relatively low fees. Understanding the dynamics of yield curves and duration allows investors to position their portfolios effectively, particularly in response to shifting interest rates and economic conditions. This article delves into these advanced strategies, providing insight into how Fixed Income ETFs can be optimised for maximum benefit.

Understanding Yield Curves

A yield curve is a graphical representation of the relationship between bond yields and their maturities. It shows the interest rates of bonds with varying lengths of time until maturity, typically ranging from short-term (a few months) to long-term (several decades). Yield curves provide critical information about market expectations for future interest rates and economic growth. Investors use …