Ahead of the Federal Reserve’s rate decision, BlackRock, the world’s largest asset manager, stated that bringing down inflation has been costly, which has created economic damages and cracks in the financial system.
“More financial cracks from rapid rate hikes are emerging. We stay underweight equities, downgrade credit and prefer short-term government bonds for income,” the financial institution said.
BlackRock added: “We don’t see central banks coming to the rescue with rate cuts but using other tools to ensure financial stability.”
While BlackRock didn’t directly outline specific investments, the benchmark S&P 500 (SP500), along with its mirroring ETFs SPDR S&P 500 Trust ETF (NYSEARCA:SPY), Vanguard S&P 500 ETF (NYSEARCA:VOO), and the iShares Core S&P 500 ETF (IVV) can be used as a proxy for broad-based equity exposure.
So far this year, the S&P 500 is up about 3%, although it is off its early high for 2023. Over the past 12 months, the index has fallen about 11%.
Meanwhile, investors can also look at BlackRock’s call from a short-term government bond base stance. From that perspective, here are some ETFs that track the performance on that front:
- iShares 1-3 Year Treasury Bond ETF (NASDAQ:SHY)
- Vanguard Short-Term Treasury ETF (VGSH)
- Schwab Short-Term U.S. Treasury ETF (SCHO)
- SPDR Portfolio Short Term Treasury ETF (SPTS)
In broader financial news, the major averages traded higher on Tuesday, as worries about contagion among regional banks eased and investors awaited the Federal Reserve’s decision on monetary policy.