Skip to content
This ETF can generate income in volatile times

Jhe war in Ukraine has exacerbated uncertainty in markets, rates, inflation and commodity supplies. Fahad Kamal, chief investment officer at Kleinwort Hambros, told the Wall Street Journal: “Markets are trying to price something that is fundamentally impossible to value because some of what happens in the world depends on thought. of Putin, which no one knows”, before adding: “The longer the conflict lasts, the more inflation is up, the less growth is down. It is massively, radically uncertain.

In addition to the uncertainty and volatility caused by the war, analysts predict that the Federal Reserve could raise rates faster than expected to curb inflation. According to the Journal, economists from Citigroup and Bank of America have suggested the Fed could raise rates half a percentage point at a time, unlike last week’s quarter-point hike.

In response to the expected rise in interest rates, stocks fell on Friday, with the S&P 500 falling 0.3% in trade, while the Dow Jones Industrial Average fell 0.1% and the Nasdaq Composite rose. fell 1.1%.

Investors seeking risk-adjusted income may want American Century Multi-Sector Income ETF (MUSI), an actively managed ETF that seeks diversified exposures across investment grade, high yield, securitized and emerging market corporate bonds. MUSI invests in both high quality corporate bonds and high yield “junk bonds”. The fund may also invest in preferred stocks, convertible securities, bank loans and other equity equivalents.

By investing in securitized credit instruments, the fund is capable of liquidity in times of market movement. Investing in high yield bonds generally means shorter tenors that are less affected by rising interest rates, as well as the ability to capture the purchase price of a refinancing company to lock in lower rates before rates rise further. This penalty is built into high yield bond yields and equates to even higher returns for investors.

MUSI’s portfolio managers alternate sector allocation based on global macroeconomic outlook combined with relative valuation between sectors. This sector allocation takes into account inflation, economic activity and monetary policy using fundamental research and quantitative modelling.

The investment mix as of December 31 was 49.42% in credit, 24.99% securitized, 14.68% emerging markets, 5.53% equities, 4.83% government and the remainder in other bonds.

MUSI has an expense ratio of 0.35% and an option-adjusted term of 3.24 years as of February 28, 2022.

For more news, insights, and strategies, visit the Core Strategies channel.

Learn more at

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.