Multiple factors, including questions around interest rates, persistent inflationary pressures, and global volatility, are shaping the fixed income landscape in 2025.
As investors seek ways to navigate uncertainty and maintain liquidity during periods of market stress, several key product launches have emerged in fixed income. These new funds offer innovative solutions to meet the evolving needs of investors.
F/M Investments Tackle Inflation
In today’s market environment, the threat of inflation remains persistent. To address this, F/M Investments launched the Ultrashort TIPS ETF (RBIL) on the Nasdaq. The fund exclusively invests in ultrashort-term TIPS with average durations of one year or less.
This move by F/M Investments reflects a growing demand for inflation-protected assets that provide a hedge against the erosion of purchasing power. RBIL gives investors a strategic, short-duration tool to gain exposure to TIPS while minimizing duration risk. The fund targets those looking to mitigate inflation risk without locking up capital for long periods of time. This makes it a good fit for an environment where interest rates are expected to remain volatile.
Vanguard Expands With Two Cash Alternatives ETFs
Next on the list are two new fixed income index ETFs from Vanguard – the Vanguard Ultra-Short Treasury ETF (VGUS) and the Vanguard 0-3 Month Treasury Bill ETF (VBIL). Both of these funds cater to investors seeking short-duration exposure to government-backed securities. Such strategies hold strong appeal during periods of heightened interest rate and inflation uncertainty.
VGUS provides investors with exposure to U.S. Treasury securities with very short durations, typically under one year. This allows the fund to manage interest rate risk while still maintaining exposure to an extremely low-risk asset class. Similarly, VBIL targets Treasury bills with maturities ranging from 0 to 3 months, providing a highly liquid and low-risk vehicle for investors to park their cash during uncertain times.
Vanguard, the largest ETF issuer in the U.S., has always been known for its thoughtful and deliberate approach to launches. With these ETFs, Vanguard is offering more precise tools for investors who want to navigate the current environment of interest rate uncertainty and market disruptions. By broadening the range of very short-term fixed income options, Vanguard is providing investors with greater flexibility to tailor their portfolios in response to a volatile economic backdrop.
BlackRock Makes Money Markets More Accessible
The launch of iShares Prime Money Market ETF (PMMF) and iShares Government Money Market ETF (GMMF) represents a significant move in making money market funds more accessible and efficient for retail and institutional investors alike. While BlackRock wasn’t the first to launch money market ETFs, it’s a major player in the space and PMMF is the first prime money market ETF.
Both PMMF and GMMF provide exposure to short-term, high-quality money market instruments. These strategies offer investors a safe, liquid alternative during periods of market volatility.
The new money market ETFs allow investors to park their funds in extremely low-risk, short-term instruments. At the same time, they allow investors to earn income while remaining highly liquid. Given the uncertainty around interest rates, economic growth, and geopolitical tensions, these funds can serve as a haven for investors wanting to preserve capital while earning incremental returns.
The growth of money market ETFs highlights the increasing demand for low-risk, liquid instruments. People are seeking investments which provide a cushion during times of volatility. Q1 was rife with defensive strategy launches; it remains to be seen how the rest of the year will unfold.
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