With the Federal Reserve expected to begin its rate-cutting cycle this week, investors should take advantage of this "golden age of fixed income" now, according to BlackRock's Rick Rieder. He sees a shift coming in the market. "The world is changing," said Rieder, the asset manager's global chief investment officer of fixed income.
"The equity market will continue to do, I think, OK, but no better than OK." Plus, as investors question the large multiples on tech stocks, the "fever pitch" that the names have enjoyed will not be sustained, he said, although he believes they will continue to do well. Investors instead should buy yield "and just watch it do its thing," he said.
BlackRock manages more than $9 trillion. "The idea of, 'Gosh, I can lock in for three to five years — and you don't have to go out to 30 years — I can lock in these yields for the next three to five years.' I think it's a pretty compelling proposition," said Rieder, who manages the BlackRock Flexible Income ETF (BINC).
The fund has a 5.84% 30-day SEC yield and net expense ratio of 0.4%.
BINC YTD mountain BlackRock Flexible Income ETF year-to-date performance Traders are split between expecting a quarter-point decrease and a half-point cut when the Fed meets this week, with a heavier weighting towards a bigger cut, according to the CME Group FedWatch Tool . Rieder is in the camp expecting the quarter-point decrease, although he personally believes the central bank should cut by a half point. In this env.