Income investors, particularly those who hold bonds, may feel like they are looking for yield in all the wrong places. Rising yields on government bonds have made headlines over the past several weeks. That only happens when there is a perceived problem.
The bond market's rumbling has had a ripple effect across a range of income-producing assets. Rising yields for one type of bond, particularly for bonds with higher credit quality, can create competition for other income-producing assets.
Exchange-traded funds (ETFs) serve as a reasonable proxy to demonstrate what is occurring. The two charts included in this week's commentary use the following ETFs, which are among the largest in their respective groups.
iShares Core U.S. Aggregate Bond ETF (AGG): An intermediate-term bond fund with $137.1 billion in assets.
iShares 20+ Year Treasury Bond ETF (TLT): The most sensitive to interest rate swings of the ETFs listed here.
iShares Broad USD High Yield Corporate Bond ETF (USHY): Holds the least creditworthy bonds of the ETFs listed here.
iShares International Treasury Bond ETF (IGOV): Japanese and French bonds combined account for 20% of its portfolio.
iShares Preferred and Income Securities ETF (PFF): The largest pure-play preferred stock ETF.
Online Exclusive: Understanding Bond Yields The stream of income that a bond or bond fund provides is characterized as its yield, but the term has different meanings for the two types of securities.
Tiny Titans Screen Targets Stocks That Institutions Miss The newly released September 2026 AAII Journal discusses a micro-cap approach for the more aggressive investor that focuses on undervalued stocks with strong relative momentum.
AAII Sentiment Survey
Pessimism among individual investors about the short-term outlook for stocks decreased in the latest AAII Sentiment Survey. This week’s special question asked AAII members whether rising long-term Treasury yields have led them to alter their allocations. More about this week's results.
This week’s results:
Bullish: 39.7%, up 6.8 points Neutral: 22.7%, up 0.1 points Bearish: 37.6%, down 6.9 points
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