A Tactical ETF: DoubleLine Total
05/25/2017 2:50 am EST
On the fixed-income side of the ledger, there continues to be a notable advantage in the implementation of active management to pursue total return, notes David Fabian, money manager of FMD Capital and editor of Flexible Growth & Income Report.
Active managers have the flexibility to shift their portfolios towards sectors showing unique value characteristics or insulate them from outsized risks (such as rising interest rates).
SPDR DoubleLine Total Return Tactical ETF (TOTL) is one of my favorite ETFs in this space because it’s run by a world-class team led by Jeffrey Gundlach of DoubleLine Capital.
It’s constructed using a mix of mortgage backed securities, Treasury bonds, corporate bonds, and emerging market fixed-income with enough diversification to act as a core bond holding.
Currently TOTL has a modified adjusted duration of 4.68 years and is generally positioned with less interest rate risk than its benchmark, the Barclays Aggregate U.S. Bond Index.
I own TOTL in my own account and those of my clients as a means of anchoring the fixed-income sleeve or our portfolio.
In my opinion, the expertise in managing credit and interest rate risks over the next several years will be worth the modestly higher expense ratio of 0.55% versus an ultra-low cost index fund.
Another actively managed fund I also hold in high regard is the PIMCO Total Return ETF (BOND). This ETF has demonstrated a strong track record in recent years through its multi-manager team approach and world-class investment research.