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5 Defensive Funds to Guard Your Nest Egg

Don't dive straight into cash — protect yourself while adding value

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PIMCO Enhanced Short Maturity ETF

PIMCO185Conservative investors that are looking for a modest yield while having a low sensitivity to interest rates might consider an ultra-short duration bond fund such as the PIMCO Enhanced Short Maturity ETF (MINT).

According to Index Universe, this ETF has accumulated more than $1.7 billion in new assets this year as investors have looked to shorten the duration of their fixed-income portfolios. With the yields in money market accounts essentially at zero, even an ETF like MINT — with a distribution yield of 0.77% — looks attractive … particularly when you consider that there are very little price fluctuations because of its focus on the short end of the yield curve. This option could present an excellent safe harbor for retirees or minimum-volatility seekers that aren’t concerned with a few months of reduced coupon payments.

An ultra-short-bond fund should be used as a temporary holding spot for excess cash that you want to put back to work in stocks or bonds at more attractive prices. It reminds me of a phrase I often use: “Nice place to visit, but I wouldn’t want to live there.” This conservative option will serve your portfolio well during times of volatility.

MINT charges just 0.35% in expenses, or $35 of each $10,000 invested.

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