Long-term bonds should rise as interest rates fall, making the Vanguard Long-Term Bond ETF a good pick. REITs benefit from lower rates, boosting the Vanguard Real Estate ETF.
BLV's performance has significantly declined over the past two years due to rising interest rates, leading to a 30% drawdown in share prices. The Federal Reserve's unprecedented rate hikes have caused bond yields to increase, impacting BLV's net asset value. Forecasted rate cuts by the Federal Reserve could potentially lead to an increase in the value of BLV's portfolio, earning the fund an upgrade.
This ETF owns 3,091 long-term bonds and has an exceptionally low annual expense ratio. Long-term bond prices will likely increase if the Fed cuts interest rates next month.
Multiple factors are behind the current market decline, including concerns about a potential recession. Several Vanguard ETFs could be good candidates to buy right now.
One ETF is a great pick with small-cap stocks roaring back. Another owns long-term bonds, which should perform well if the Fed cuts interest rates.
With high yields in the current bond market environment, it was easy to get lured into risky debt despite the credit risk. Now, investors could be shifting to safer debt, which could outperform once the Federal Reserve starts cutting interest rates.
Downward pressure on bond prices from high interest rates is starting to ease. This opens opportunities for institutional investors to return to bonds again.