Deep Dive: Interest rates uncertainty fuels investor interest in short-term fixed income ETFs

‘Right place to be’

Fund managers have hedged against interest rates uncertainty with a bullish call on short-term fixed income ETFs, and asset experts believe provides flexibility in managing duration risk until the monetary policy path is clearer.

According to John Leiper, chief investment officer at Titan Asset Management, the shifting narrative from the Federal Reserve about its plans to cut rates in 2024 has confirmed that short duration is the "right place to be". At the end of last year, the Federal Reserve sparked a market rally after it moved away from its hawkish stance on interest rates and indicated that cuts could begin in 2024. Markets are currently pricing in approximately three rate cuts from the Fed this year, but at the time as many as six were forecast. This optimism also spurred a historic two-month rally in b...