Preparing for a New Fixed Income Environment in 2024

Aggregate bond benchmarks rebounded this year following some of the worst showings on record in 2022. With heightened expectations that the Federal Reserve could cut interest rates in 2024, fixed income enthusiasm is perking up.

While declining interest rate risk, assuming it materializes, is likely to compel advisors and investors to consider upping their exposure to long duration fare, there are other credible avenues for maintaining robust levels of income even as interest rates decline. That goal can be accomplished in tax-efficient fashion with the help of the NEOS Enhanced Income Aggregate Bond ETF (BNDI).

The actively managed BNDI combines the relative safety of an aggregate bond fund with added income-generating potential because the ETF writes (sells) S&P 500 Index (SPX) options. As a result, BNDI’s income profile is bigger than that of a standard pure beta aggregate bond index fund or ETF.

Betting on Bond ETF BNDI in 2024

Currently, there’s ample enthusiasm for rate cuts in 2024, but investors still need to understand why the Federal Reserve would consider such action. Historically, rate cuts arrive because inflation is declining, in an effort to avert a recession or because economic contraction is already happening.