Marissa Ansell, Goldman Sachs head of ETF investment strategy, joins CNBC’s Dominic Chu on the ‘Halftime Report’ to discuss how clients should be positioned next week ahead of the Fed’s potential September rate cut. Ansell shares three areas clients are leaning into.

With the possibility of a Federal Reserve rate cut, ETF investors are being advised to reassess their portfolios. Marissa Ansell from Goldman Sachs Asset Management suggests that as cash and money market yields decline, investors should consider moving into ultra short duration bond funds and ultra short municipal income ETFs for better returns.

Additionally, for those seeking income, dividend-focused and derivative income ETFs are highlighted as attractive options. These funds can provide equity exposure with lower volatility and consistent income, making them suitable for the current market environment. The discussion underscores the importance of adapting investment strategies in anticipation of changes in interest rates.

How investors can position for a September rate cut with ETFs

All right. Welcome back with a potential rate cut looming next week. How should you play it in the ETF market? Dom Chiu will tell you in today's ETF Edge. All right. So, Scott, with that Fed expectation of a Fed rate cutting cycle, possibly through at least the end of this year, ETF investors are reassessing their allocation. So joining me now is Marissa Ansell, the head of ETF investment strategy over at Goldman Sachs Asset Management. Marissa, thank you very much for being here with us. Now, the curious part, if there were to be a Fed rate cycle to the downside, it would make cash less attractive. That means investors are going to be looking for places to go. In the fixed income side of things, what is your kind of outlook and strategy for how to tackle the bond side of the investment? Great. Well, first of all, thanks for having me on the show. Great to be here with you today. Yeah. So, look, with Fed potentially cutting rates next week, I think you're exactly right. People's cash and money market funds in their portfolios in particular are going to see yields come down. You know, I think there are a few pretty easy things that we that our clients can can do in their portfolios. Number one, step out of cash and actually look to other bond strategies like ultra short duration funds. Number two, actually look in the equity space and maybe we can get onto that for interesting income opportunities as well. So on the bond side of things, what type are we looking at? Corporate investment grade or shorter long term? How exactly does that go? Yeah. So I think there's a place for all of that in investor portfolios. But in particular, we're advising our clients to move out of money market funds where you're not really getting a lot of yield. You're going to get even less probably and move into ultra short strategies such as our ultra short bond ETF, GST or our ultra short municipal income ETF, GMI. All right. So we're showing some of these right now as well. Also, for dividend focused investors who are looking for that kind of exposure to income streams. What about the dividend side? How do you tackle that? Yeah, it's a great question. This year, actually, we've seen tremendous flows into derivative income ETFs. Forty four billion dollars, to be precise. So funds like GPX, GPIQ, which are our premium income equity ETFs, they actually solve a couple of different problems for investors. Number one, they give equity exposure, but with less volatility. So pretty ideal for the current market environment. And number two, they actually provide consistent high regular income to help our clients meet their income needs. All right. So the bond play and the equity plays Marissa Ansell at Goldman Sachs. Thank you very much, Scott. I'll send it back over to you guys. But again, all eyes on the Fed and just how to tackle those investment strategies coming up next week. All right. Good stuff. Thanks, Dom. Appreciate you, Dom Chiu.

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Chicago

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Breakdown